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entitled 'Defense Logistics: Actions Needed to Improve the Availability 
of Critical Items during Current and Future Operations' which was 
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Report to Congressional Committees: 

April 2005: 

Defense Logistics: 

Actions Needed to Improve the Availability of Critical Items during 
Current and Future Operations: 

GAO-05-275: 

GAO Highlights: 

Highlights of GAO-05-275, a report to congressional committees:

Why GAO Did This Study: 

GAO has identified spare parts supply as a long-standing Department of 
Defense (DOD) management problem. In December 2003, GAO reported on 
problems with Operation Iraqi Freedom (OIF) logistics support including 
shortages of spare parts and supplies in Iraq. This report expands on 
that effort by assessing (1) what supply shortages were experienced by 
U.S. forces in Iraq between October 2002 and September 2004 and what 
impact the shortages had on their operations, (2) what primary 
deficiencies in the supply system contributed to any identified supply 
shortages, and (3) what actions DOD has taken to improve the timely 
availability of supplies for current and future operations. 

To address these objectives, GAO judgmentally selected nine items based 
on lessons learned and after action reports that represented possible 
shortages with operational impacts. 

What GAO Found: 

U.S. troops experienced shortages of seven of the nine items GAO 
reviewed. According to the 2004 National Military Strategy, U.S. forces 
expect to have sufficient quantities of the right items at the right 
time. However, demand for the seven items exceeded availability 
sometime between October 2002 and September 2004. The documented impact 
of these shortages varied between combat units. For example, while 
units in the 3rd Infantry Division reported that tire shortages reduced 
their operational capability, forcing them to abandon equipment, the 
4th Infantry Division reported no similar effect. 

GAO identified five systemic deficiencies that contributed to shortages 
of the reviewed items, including inaccurate Army war reserve spare 
parts requirements and ineffective distribution. Annual updates of Army 
war reserve parts requirements have not been conducted since 1999. As a 
result, the war reserves did not contain enough track shoes, batteries, 
and tires to support U.S. forces during initial operations. Effective 
distribution relies on a seamless process to promptly move supplies 
from the United States to a customer. GAO found that conflicting 
doctrinal responsibilities for distribution management, improperly 
packed shipments, insufficient transportation personnel and equipment, 
and inadequate information systems prevented the timely availability of 
four of the items. 

Systemic Deficiencies Contributing to Shortages of Seven GAO-Selected 
Items

[See Table 1]

Source: GAO analysis.

[A] These are Marine-Corps-only items. 

[End of table]

While U.S. troops developed short-term solutions to manage item 
shortages during OIF, DOD and the services have begun to undertake 
systemic, long-term changes to fix some supply problems identified. 
While GAO did not evaluate their potential for success, the majority of 
the changes are focused on distribution, and not on the full gamut of 
systemic deficiencies GAO identified. 

What GAO Recommends: 

This report contains several recommendations to the Secretary of 
Defense directing that actions, such as ensuring the accuracy of Army 
war reserve requirements and developing and exercising deployable 
distribution capabilities, be taken to improve DOD’s system for 
supplying items to U.S. forces. DOD concurred with the intent of the 
recommendations and cited actions it has taken or will be taking. 

www.gao.gov/cgi-bin/getrpt?GAO-05-275. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact William Solis at (202) 
512-8365 or solisw@gao.gov. 

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

Supply Shortages Reduced Operational Capability and Increased Risk to 
Troops in Iraq: 

Multiple Supply Chain Deficiencies Contributed to Supply Shortages: 

DOD Actions to Improve Supply Availability for Current and Future 
Operations: 

Conclusions: 

Recommendations for Executive Action: 

Matter for Congressional Consideration: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Assault Amphibian Vehicle Generators: 

Appendix III: Armored Vehicle Track Shoes: 

Appendix IV: Interceptor Body Armor: 

Appendix V: Joint Service Lightweight Integrated Suit Technology Suits: 

Appendix VI: BA-5590 and BA-5390 Lithium Batteries: 

Appendix VII: Marine Corps Helicopter Rotor Blades: 

Appendix VIII: Meals Ready-to-Eat: 

Appendix IX: Five-Ton Truck and High-Mobility Multi-Purpose Wheeled 
Vehicle Tires: 

Appendix X: Up-Armored High-Mobility Multi-Purpose Wheeled Vehicle and 
Add-on-Armor Kit: 

Appendix XI: Comments from the Department of Defense: 

Appendix XII: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Systemic Deficiencies Contributing to Shortages of Seven GAO- 
Selected Items: 

Table 2: DOD and Joint Guidance on Distribution: 

Table 3: Systemic Deficiencies Contributing to Shortages of Seven 
Supply Items: 

Table 4: War Reserve Requirements, On-Hand Stock, and Items Requested 
Worldwide: 

Table 5: Status of On-Hand Army War Reserve Spare Parts Requirements as 
of October 2004: 

Table 6: Item and Supply Manager: 

Table 7: Organizations Interviewed during Review: 

Table 8: Forecasted and Actual Demand for Abrams and Bradley Track 
Shoes (March-May 2003): 

Table 9: CECOM Unfunded Requirements for Fiscal Years 2001 through 
2003: 

Figures: 

Figure 1: CENTCOM's Area of Responsibility: 

Figure 2: Total Military Personnel Deployed in CENTCOM's Area of 
Responsibility in Support of Operation Enduring Freedom and Operation 
Iraqi Freedom, December 2002 through September 2004: 

Figure 3: DOD's Joint Distribution System: 

Figure 4: Fiscal Year 2003 Army Working Capital Fund Supply Management 
Requirements and Cumulative Obligation Authority Received: 

Figure 5: Fiscal Year 2003 DLA Supply Management Requirements and 
Cumulative Obligation Authority Received: 

Figure 6: Assault Amphibian Vehicle and Generator: 

Figure 7: Assault Amphibian Vehicle Generator Demand and Back Orders 
for OIF by Quarter (3rd quarter fiscal year 2001 through 4th quarter 
fiscal year 2004): 

Figure 8: Abrams Tank Track: 

Figure 9: Interceptor Body Armor: 

Figure 10: Worldwide Demand, Production Output, and Back Orders for 
Vests by Quarter (December 2001 through September 2004): 

Figure 11: Worldwide Demand, Production Output, and Back Orders for 
Plates by Quarter (December 2001 through September 2004): 

Figure 12: Joint Service Lightweight Integrated Suit Technology Suit: 

Figure 13: BA-5590 Lithium Battery: 

Figure 14: Worldwide Demand, Inventory Levels, and Back Orders for BA- 
5590 and BA-5390 Lithium Batteries by Month (October 2001 through 
August 2004): 

Figure 15: Worldwide Forecasted Requirements, Demand, and Production 
Output for BA-5590 and BA-5390 Lithium Batteries by Month (October 2001 
through August 2004): 

Figure 16: Rotor Blades on CH-53E Super Stallion: 

Figure 17: UH-1N Rotor Blade Demand and Back Orders by Month (March 
2003 through September 2004): 

Figure 18: CH-53E Rotor Blade Demand and Back Orders by Month (March 
2003 through September 2004): 

Figure 19: Meal Ready-to-Eat: 

Figure 20: Forecasted Requirements, OIF Demand, Production Output, and 
Inventory for MREs (December 2002 through June 2003): 

Figure 21: M-923 5-ton Truck: 

Figure 22: Worldwide Demand, Back Orders, and Inventory Level for the 
5- ton Truck Tire by Month (February 2002 through September 2004): 

Figure 23: Worldwide Demand, Back Orders, and Inventory Level for the 
HMMWV Tire by Month (February 2002 through September 2004): 

Figure 24: TACOM's Actual and Reset Requirements, Funding Executed and 
Received by Month, Fiscal Year 2003: 

Figure 25: Up-Armored HMMWV: 

Figure 26: Add-on-Armor Kit Mounted on HMMWV: 

Figure 27: Up-Armored HMMWV Requirements, Production Output, and 
Redistribution from August 2003 through September 2004: 

Figure 28: Add-on-Armor Requirements and Production Output, November 
2003 through September 2004: 

Figure 29: Up-Armored HMMWV Funding, Requirements, Production Output by 
Month (August 2003 through September 2004): 

Abbreviations Abbreviations: 

AAV: Assault Amphibian Vehicle: 

AMC: Army Materiel Command: 

ATLASS: Asset Tracking Logistics and Supply System: 

CECOM: Communications-Electronics Command: 

CENTCOM: U.S. Central Command: 

DLA: Defense Logistics Agency: 

DOD: Department of Defense: 

HMMWV: High-Mobility Multi-Purpose Wheeled Vehicle: 

JSLIST: Joint Service Lightweight Integrated Suit Technology: 

MRE: Meals Ready-to-Eat: 

OIF: Operation Iraqi Freedom: 

SAIC: Science Applications International Corporation: 

TACOM: Tank-automotive and Armaments Command: 

Letter April 8, 2005: 

The Honorable John W. Warner: 
Chairman: 
The Honorable Carl Levin: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Duncan Hunter:
Chairman: 
The Honorable Ike Skelton: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

To support Operation Iraqi Freedom (OIF), the largest deployment of 
U.S. troops since Operation Desert Shield/Desert Storm in 1990, the 
Department of Defense (DOD) has undertaken a massive logistics 
effort,[Footnote 1] moving more than 2 million short tons of cargo 
including equipment, spare parts, supplies, and other items several 
thousand miles to the Persian Gulf. This effort started in late 2001 as 
U.S. Central Command (CENTCOM)[Footnote 2] began planning for OIF, 
accelerated as troops deployed in the fall of 2002 and major combat 
operations were launched on March 19, 2003, and continues today while 
U.S. and coalition forces undertake stabilization efforts in Iraq. From 
October 2002 through September 2004, DOD reported spending $51.7 
billion for operating support, including fuel, spare parts, and 
facilities management, and $10.7 billion for transportation of 
personnel and supplies to sustain[Footnote 3] U.S. forces before, 
during, and after major combat operations in Iraq. Despite these 
expenditures, there have been widespread reports of serious shortages 
of some critical items needed by U.S. troops. 

DOD relies on a number of individual processes and activities, known 
collectively as supply chain management, to purchase, produce, and 
deliver products and services to the warfighter during contingency 
operations consistent with the National Military Strategy. The goal of 
supply chain management is to deliver the "right items to the right 
place at the right time" for the warfighter. To meet the initial 
increase in demand during a contingency, DOD depends on its war 
reserves--stocks of specifically designated weapon systems, equipment, 
spare parts,[Footnote 4] and other items that are amassed during 
peacetime. The war reserves are intended to fill the gap until the 
national supply system can increase production.[Footnote 5] DOD relies 
on defense working capital funds to finance the flow of supplies to the 
services. These revolving funds are financed by sales revenue rather 
than direct appropriations. Working capital funds allow the Defense 
Logistics Agency (DLA) and the services' logistics agencies to purchase 
needed items from suppliers. Military units then order items from the 
logistics agencies and pay for them with appropriated funds when the 
requested items--either from inventory or manufacturers--are delivered 
to the units. Supplies are shipped from the United States by air and 
sea through DOD's joint distribution system and delivered to deployed 
units. 

Since the 1990s, we have identified DOD's supply chain management as a 
high-risk area because of high inventory levels and a supply system 
that was not responsive to the needs of the warfighter. In a 
substantial body of work, we have examined a range of problems, 
including inventory management and shortages of critical spare 
parts.[Footnote 6] DOD also recognizes supply chain management as a 
serious issue. In the Quadrennial Defense Review for 2001, DOD stated 
its intention to transform its logistics capabilities to improve the 
deployment process and implement new logistics support tools that 
accelerate logistics integration between the services and reduce 
logistics demand and cost. OIF is one of the first major tests of these 
new capabilities, and we have reported on the supply chain issues that 
have impeded support to the warfighter. For example, after visiting the 
theater in 2003, we provided our preliminary observations on the 
effectiveness of logistics support during OIF.[Footnote 7] Among the 
problems we observed were the unavailability of spare parts, hundreds 
of backlogged shipments, and an inability to track shipments at the 
distribution centers. 

Supplying spare parts has been a long-standing DOD management problem. 
Under the Comptroller General's authority, we evaluated the 
effectiveness of spare parts and related logistics support being 
provided to deployed forces for OIF. Our objectives were to assess (1) 
what supply shortages were experienced by U.S. forces in Iraq and what 
impact the shortages had on operations, (2) what primary deficiencies 
in the supply system contributed to any identified supply shortages, 
and (3) what actions DOD has taken to improve the timely availability 
of supplies for current and future operations. 

We developed detailed case studies of nine supply items that were 
reported to be in short supply during OIF. (These items, identified in 
the Results in Brief section, were managed by various organizations 
within DOD including the Army, the Marine Corps, and DLA.) We chose the 
items that we believed presented possible shortages with operational 
impacts based on information available in GAO and military reports, 
military and contractor lessons-learned studies, and other accounts 
covering the time period between October 2002 and September 2004. To 
identify the extent and impact of supply shortages, we visited numerous 
DOD logistics organizations to obtain data on the production, 
availability, and distribution of supply items at the national level. 
When supply data specifically for OIF were not available, we used 
worldwide data since OIF received supply priority. We also interviewed 
members of units that had returned from the theater to determine the 
extent and impacts of item shortages on their operations. We identified 
deficiencies that affected the availability of two or more of the case 
study items. We worked with DOD logistics agencies, operational units, 
and service and geographic commands to evaluate the significance of 
these deficiencies to DOD's overall logistics system. We also 
identified DOD's and the services' short-term and long-term efforts to 
address these shortages. We assessed the reliability of the data we 
obtained for individual items and determined they were sufficiently 
reliable for our purposes. We performed our review from March 2004 
through February 2005 in accordance with generally accepted government 
auditing standards. A detailed discussion of our scope and methodology 
is located in appendix I. 

Results in Brief: 

U.S. troops experienced shortages of seven of the nine items we 
reviewed. According to the 2004 National Military Strategy, U.S. forces 
expect to have sufficient quantities of the right items at the right 
time. During OIF, DOD was responsible for moving millions of tons of 
supplies and spare parts to theater. However, demand for seven items we 
reviewed exceeded availability sometime between October 2002 and 
September 2004. These shortages led, in some cases, to a decline in the 
operational capability of equipment and increased risk to troops. These 
items included generators for assault amphibian vehicles, armored 
vehicle track shoes, Interceptor body armor, lithium batteries, Meals 
Ready-to-Eat, tires for 5-ton trucks and High-Mobility Multi-Purpose 
Wheeled Vehicles, and up-armored High-Mobility Multi-Purpose Wheeled 
Vehicles and add-on armor kits. For example, in August 2003 the Army's 
inventory contained only 505 tires for 5-ton trucks which fell far 
below the worldwide monthly demand of 4,828 tires, most of which were 
needed by troops in Iraq. The remaining two items that we examined-- 
chemical-biological suits and Marine Corps helicopter rotor blades--did 
not experience shortages in theater. The impact of supply shortages on 
military operations is difficult to quantify because it varies from one 
combat unit to another and is not always apparent in DOD's readiness 
systems. For example, while units in the 3rd Infantry Division reported 
that tire shortages reduced their operational capability by forcing 
them to abandon equipment, the 4th Infantry Division reported that its 
tire shortages had no such effect. Detailed case studies, including the 
extent of shortages and their impacts, contributing factors, and short- 
and long-term solutions, for each of the nine items we studied are in 
appendixes II through X. 

Five systemic supply system deficiencies primarily contributed to the 
shortages for the seven items. As discussed in the body of this report, 
studies conducted by DOD and defense contractors indicate that these 
deficiencies also affected other items in the supply system. The five 
deficiencies are identified in table 1. 

Table 1: Systemic Deficiencies Contributing to Shortages of Seven GAO- 
Selected Items: 

Item: Vehicle generators; 
Ineffective distribution. 

Item: Track shoes; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding. 

Item: Body armor; 
Delayed acquisition; 
Ineffective distribution. 

Item: Batteries; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Delayed acquisition. 

Item: Meals Ready-to-Eat; 
Inaccurate supply forecasts; 
Ineffective distribution. 

Item: Tires; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Ineffective distribution. 

Item: Up-armored High-Mobility Multi-Purpose Wheeled Vehicles and kits; 
Delayed acquisition. 

Source: GAO analysis. 

[End of table]

* Inaccurate and inadequately funded Army war reserve requirements. 
Annual updates of the Army's war reserve requirements have not been 
conducted since 1999. According to officials from the Army Materiel 
Command, they had not updated the war reserve requirements because they 
had not received the latest operational guidance from Army 
headquarters. However, an Army official provided us with copies of the 
guidance sent to the Army Materiel Command and attributed the failure 
to run the model to a variety of reasons, including problems with new 
databases. This guidance, based on the annually updated defense 
planning guidance, details the force structure and operations that the 
Army's war reserve must support. Also, Army data showed that war 
reserve requirements had not been not fully funded for many years. This 
indicates that the Army has made a risk management decision to not fund 
war reserves. This decision forced war reserve managers to prioritize 
the use of available funding, and left some items without a war reserve 
to support initial operations. The Army's out-of-date and inadequately 
funded war reserve requirements for spare parts negatively affected the 
availability of three items we reviewed (armored vehicle track shoes, 
lithium batteries, and tires). The underfunding problem continues as 
only $561.7 million, or 24 percent, of the Army's $2,327.4 million war 
reserve requirements were funded as of October 2004. While this funding 
information has been reported to Congress, the likely risk to 
operations of not fully funding the war reserve has not. To improve the 
accuracy and adequacy of Army war reserve requirements we recommend the 
Army update the data for its war reserve model based on the latest 
defense planning guidance, annually update war reserve requirements, 
and disclose to Congress the impact of risk management decisions to not 
fully fund the war reserve. 

* Inaccurate supply forecasts. As indicated by regulation, the Army 
uses computer models to forecast item demand. The regulation also 
indicates that the Army's model be able to switch to a wartime 
forecasting method; however, the model available during pre-OIF 
planning had no such capability. While DLA had a model to forecast 
contingencies, it was not effective for all items, such as Meals Ready-
to-Eat. Therefore, Army item managers had to manually develop forecasts 
for OIF, but they did not always have sufficient or timely information 
on estimated deployment sizes or the duration of operations which are 
needed to forecasted accurate supply requirements. As a result, they 
underestimated the demand for some items. By contrast, Marine Corps 
item managers forecasted requirements from operational plans and 
equipment changes. However, the accuracy of these requirements has not 
yet been completely reconciled with actual usage during OIF. This is 
particularly important because, while the Marine Corps may have 
accurately forecasted requirements and predicted the types of items 
needed, the Marine Corps has not confirmed the proper quantities. DOD's 
requirements processes were not able to accurately forecast supply 
requirements for four items we reviewed (armored vehicle track shoes, 
lithium batteries, Meals Ready-to-Eat, and tires). To improve the 
accuracy of the Army's prewar planning for supplies, we recommend the 
Army develop models that have the capability to accurately forecast 
operational requirements and ensure that item managers receive timely 
data from operational plans. To improve the accuracy of the Marine 
Corps' wartime forecasts, we recommend the service complete its 
reconciliation of forecasted requirements with actual OIF consumption 
data and make needed adjustments to its requirements. 

* Insufficient and delayed funding. By regulation, DOD components are 
supposed to structure their supply chain processes to provide flexible 
and prompt support during crises. During OIF, the Army Materiel Command 
asked for additional funding (known as obligation authority) in order 
to support the forecasted OIF requirements, but did not receive these 
funds in a timely manner. While data are not available to conclusively 
determine why the process could not provide more timely and adequate 
funding, the Army's multi-stage requirements validation process may 
have contributed to the delays. This lack of obligation authority and 
delays in its release impeded the availability of three items we 
reviewed (armored vehicle track shoes, lithium batteries, and tires). 
By contrast, DLA was able to move obligation authority among accounts 
to support projected demands and did not require numerous validations 
to justify its forecasted requirements. To improve the sufficiency and 
timeliness of funding to the Army Materiel Command, we recommend the 
Army establish an expeditious supply requirements validation process 
that provides accurate information to support timely and sufficient 
funding. 

* Delayed acquisition. Despite requirements that the supply system 
provide timely support during crises, specific problems delayed DOD's 
acquisition of three important items we reviewed (Interceptor body 
armor, lithium batteries, and up-armored High-Mobility Multi-Purpose 
Wheeled Vehicles). The lack of key materials and long production lead-
time continue to affect the production of body armor, and DOD has 
reported the limitation to Congress. The initial reliance on a single 
source manufacturer and long production lead-time initially delayed 
maximum production of lithium batteries. DOD's acquisition decision did 
not maximize available capacity to produce up-armored High-Mobility 
Multi-Purpose Wheeled Vehicles and add-on armor kits nor did it give 
Congress visibility over the basis for its acquisition solution. These 
acquisition challenges impeded DOD's ability to respond to rapidly 
increasing demands. To minimize acquisition delays in the future, we 
recommend the Army and Defense Logistics Agency assess the industrial- 
base's capacity to meet updated requirements for critical items within 
the time frames required by operational plans and provide visibility to 
Congress over acquisition of critical items that emerge during 
contingencies. 

* Ineffective distribution. According to DOD guidance, distribution is 
the operational process of synchronizing all elements of the logistics 
system to deliver the "right things" to the "right place" at the "right 
time" to support the combatant commander. We identified several times 
where the joint distribution system was not synchronized to support the 
combatant commander during OIF. Among the problems causing this lack of 
synchronization were (1) conflicting doctrine, or military principles, 
defining the authority of the geographic combatant commander to 
synchronize the distribution of supplies from the U.S. to the theater; 
(2) improper packaging of air shipments from the U.S., which forced 
personnel in theater to spend extra time opening and sorting shipments; 
(3) insufficient transportation equipment and supply personnel in 
theater; and (4) the inability of logistics information systems to 
support the requisition and shipment of supplies into and through Iraq. 
As a result, DOD was not able to distribute sufficient quantities of 
four items we reviewed (assault amphibian vehicle generators, 
Interceptor body armor, Meals Ready-to-Eat, and tires). To improve the 
effectiveness of distribution we recommend that DOD revise current 
joint distribution doctrine to clarify responsibilities and 
authorities; develop and exercise, possibly through a mix of simulation 
and field training, a deployable supply receiving and theater 
distribution capability that includes trained personnel and necessary 
equipment; and establish common logistics information systems that 
support the timely requisition of and visibility over supplies. 

Two of the items we reviewed did not have shortages (chemical- 
biological suits and Marine Corps helicopter rotor blades). While 
acquisition delays and ineffective distribution resulted in a perceived 
shortage of chemical-biological suits among personnel deployed to OIF, 
we could not identify situations where suits were unavailable. 
Similarly, while rotor blades were identified as a possible shortage, 
Marine Corps officials and our analysis of supply data indicated there 
was no actual shortage. 

DOD, the services, and the defense agencies have acted to improve 
supply availability. Many short-term solutions to lessen the impact of 
supply shortages were instituted during combat operations. For example, 
as a result of the lithium battery shortage, the Joint Staff developed 
the "critical few list" to improve the availability of specific items 
that the services and geographic combatant commands report as critical 
to their worldwide operations. DOD is also beginning to make systemic, 
long-term changes to correct some of its supply problems. One of the 
more notable is the Secretary of Defense's designation of the U.S. 
Transportation Command as being responsible for improving distribution. 
In addition, the Army has identified four areas of logistics focus for 
the next 2 years: connecting the logistician, modernizing theater 
distribution, improving force reception, and integrating the supply 
chain. While we did not evaluate these efforts' potential for success, 
we observed that the majority of them focus only on the distribution 
aspects of logistics problems identified during OIF, not the full gamut 
of supply deficiencies we identified. 

In commenting on a draft of this report, the Department of Defense 
concurred with the intent of the recommendations and cited actions it 
has taken or will be taking to eliminate the supply chain deficiencies 
we noted. While many of the actions cited, if completed, could clearly 
resolve some problems, others actions did not appear to fully address 
the need to improve the current practices. In addition, no specific 
timeline for action was provided; therefore, we modified our 
recommendations to require specific completion dates. Therefore, we 
have added a matter for congressional consideration that suggests 
Congress may wish to require DOD to disclose the risks associated with 
not fully funding the Army war reserve. The Department's responses are 
in appendix XI and our evaluation of them appears on page 128 of this 
report. 

Background: 

CENTCOM, whose area of responsibility encompasses 27 countries in South 
and Central Asia, the Horn of Africa, the Arabian Peninsula, and 
Iraq[Footnote 8] began planning for OIF in late 2001 (see fig. 1). 

Figure 1: CENTCOM's Area of Responsibility: 

[See PDF for image]

[End of figure]

Starting in mid-2002, CENTCOM began to improve the U.S. military's 
infrastructure in Kuwait. This included an expansion of fuel and port 
facilities to support the arrival of U.S. military units. Beginning in 
the fall of 2002, CENTCOM began to deploy troops to the OIF area of 
operation. These deployments continued up to, and beyond, the start of 
major combat operations in Iraq on March 19, 2003. According to the 
Defense Manpower Data Center, the number of military personnel deployed 
in CENTCOM's area of responsibility in support of OIF and Operation 
Enduring Freedom steadily increased from over 113,000 in December 2002 
to over 409,000 in May 2003 (see fig. 2). During major combat 
operations, over 280,000 U.S. military personnel were deployed in Iraq, 
Kuwait, and nearby Persian Gulf nations. All of the services were 
represented in the theater, but U.S. Army units formed the bulk of 
military personnel. After major combat operations were officially 
declared over on May 1, 2003, the total number of personnel in 
CENTCOM's area of responsibility began to gradually decrease. However, 
U.S. and coalition forces continue to conduct stabilization operations 
in Iraq and DOD increased the number of military personnel in Iraq to 
support the elections in January 2005. 

Figure 2: Total Military Personnel Deployed in CENTCOM's Area of 
Responsibility in Support of Operation Enduring Freedom and Operation 
Iraqi Freedom, December 2002 through September 2004: 

[See PDF for image]

[End of figure]

Organizations Responsible for Logistics: 

CENTCOM's command authority over units deployed to its area of 
responsibility allows it to direct all necessary military actions to 
assigned military forces, including units deployed in both Operation 
Enduring Freedom in Afghanistan and OIF. Command authority also 
provides the geographic combatant commander with directive authority 
over logistics.[Footnote 9] The services and other defense components, 
however, share the responsibility of supplying U.S. forces.[Footnote 10]

The directive authority gives the combatant commander the ability to 
shift logistics resources within the theater, but logistics support 
outside of the area of responsibility is usually dependent on the 
services. The combatant commander relies on the services' logistics 
components, such as the U.S. Army Materiel Command (AMC), the U.S. 
Marine Corps Logistics Command, and DLA to purchase supplies and manage 
inventory. AMC has major subordinate commands that manage supply 
inventories, such as the Communications-Electronics Command (CECOM) and 
the Tank-automotive and Armaments Command (TACOM). DLA has a role in 
packaging supplies for shipment, while the U.S. Transportation Command 
is responsible for delivering them to theater. The combatant commander 
assigns one service as the lead for logistics support, including 
transportation, in the theater.[Footnote 11] During OIF, the Army was 
the lead service for logistics support. 

War Reserves: 

The military services rely heavily on their specifically designated war 
reserve stock, including weapon systems, equipment, and spare parts, to 
equip units when they first arrive in a theater of operation. The 
Army's war reserves consist of major items including trucks and 
secondary items such as spare parts, food, clothing, medical supplies, 
and fuel. Spare parts have the largest dollar value of the Army's 
secondary items. 

War reserves are protected go-to-war assets that are not to be used for 
purposes such as improving peacetime readiness or filling unit 
shortages. Some of these assets are located in Southwest Asia, the 
Pacific, Europe, and on special war reserve ships. War reserves are 
funded through direct congressional appropriations that are requested 
in the services' annual budget submissions. 

AMC is responsible for determining the Army's requirements for war 
reserve spare parts.[Footnote 12] To do this, AMC officials use a 
computer model--the Army War Reserve Automated Process system. The 
model uses DOD planning guidance and Army information on anticipated 
force structure including a list of the end items and associated spare 
parts. For each end item or part, the model uses data on expected usage 
and spare parts consumption rates based on breakage, geography, 
environment, and rates of equipment loss due to battle damage. 

The Marine Corps Logistics Command and logistics planners from Marine 
operational units are responsible for determining annually the adequacy 
of war reserve stock based on current operational plans. Once this is 
determined, planning officials confirm the availability of the supplies 
with DLA and other supporting logistics agencies that manage individual 
items. 

Operational Requirements: 

DOD forecasts operational requirements for spare and repair parts 
differently than it does for items that result from rapidly emerging 
needs. DOD forecasting methods for spare and repair parts vary by 
service. The Army normally uses a computer model to forecast its spare 
and repair parts requirements based on the average monthly demand over 
the previous 24 months. The Marine Corps also uses models and involves 
operational and logistics planners at several levels of command to 
validate their forecasted requirements. 

Operational requirements to support rapidly emerging needs, such as 
Interceptor body armor and up-armored High-Mobility Multi-Purpose 
Wheeled Vehicle (HMMWV), are developed outside of normal supply 
forecasting procedures. They are identified through operational needs 
statements from the theater that are validated and resourced by the 
Army. Units in theater submit operational needs statements for the 
items, which are combined by their higher headquarters into theater 
requirements. 

The Coalition Forces Land Component Command[Footnote 13] communicates 
these requirements to the Department of the Army, where they are 
validated and resourced by offices of the Assistant Secretary of the 
Army (Financial Management and Comptroller), the Deputy Chief of Staff 
for Operations, the Deputy Chief of Staff for Program and Analysis, and 
the Deputy Chief of Staff for Logistics and eventually transmitted to 
the program manager. 

Supply Item Funding: 

Generally, supplies and equipment for customers--including military 
units and DOD agencies--are purchased using defense working capital 
funds or procurement funds. 

Defense Working Capital Funds: 

Of the nine items we examined, seven are purchased using defense 
working capital funds (assault amphibian vehicle (AAV) generators, 
armored vehicle track shoes, chemical-biological suits, lithium 
batteries, Marine Corps helicopter rotor blades, Meals Ready-to-Eat 
(MRE), and tires). Working capital fund managers at the logistics 
agencies obligate and spend funds to purchase supplies from 
manufacturers and repair items to build up inventories in anticipation 
of sales. Military units then order supplies from the logistics 
agencies. When the requisitioned supplies are delivered, the units pay 
for them with funds that are appropriated annually by Congress. The 
logistics agencies then use this revenue to pay the manufacturers and 
to cover their own operating costs. 

Several funds make up the defense working capital funds, including the 
Army Working Capital Fund, the Navy Working Capital Fund (which 
finances Marine Corps managed items), and the Defense-wide Working 
Capital Fund (which finances Defense Logistics Agency-managed items). 
AMC uses the Army Working Capital Fund to purchase and maintain 
supplies. 

Procurement Funds: 

The remaining two items (Interceptor body armor and up-armored HMMWVs) 
are purchased with procurement funding because they are still in the 
process of initial issuance. Procurement funds are used to pay for such 
expenses as the purchase of weapons and weapon components, 
communication and support equipment, munitions, initial and 
replenishment spare parts, and modernization equipment. Project 
managers for these items receive congressional appropriations to fund 
purchases of additional supplies. 

Distribution Doctrine and Process: 

DOD guidance defines distribution as the operational process of 
synchronizing all elements of the logistics system to deliver the 
"right things" to the "right place" at the "right time" to support the 
combatant commander.[Footnote 14] These elements include physical, 
financial, information, and communication networks, which can be 
divided into two general categories--the actual movement of supplies 
(physical networks) and the use of information technology (financial, 
information, and communication networks) to support distribution system 
activities.[Footnote 15] Table 2 lists the primary DOD regulation and 
joint doctrine[Footnote 16] that guide the distribution process. 

Table 2: DOD and Joint Guidance on Distribution: 

Publication number: DOD Regulation 4140.1-R; 
Title: DOD Supply Chain Materiel Management Regulations; 
Date of publication: May 23, 2003. 

Publication number: Joint Publication 4-0; 
Title: Doctrine for Logistic Support of Joint Operations; 
Date of publication: April 6, 2000. 

Publication number: Joint Publication 4-01; 
Title: Joint Doctrine for the Defense Transportation System; 
Date of publication: March 19, 2003. 

Publication number: Joint Publication 4-01.4; 
Title: Joint Tactics, Techniques, and Procedures for Joint Theater 
Distribution; 
Date of publication: August 22, 2000. 

Source: GAO analysis. 

[End of table]

In its guidance, DOD identifies eight fundamental principles of theater 
distribution: 

1. Centralized management: Identify one manager who is responsible for 
distribution, visibility, and control of items in the theater 
distribution system. 

2. Optimize the distribution system: Give distribution managers the 
ability to maintain visibility in locations under their control and 
provide them with resources to meet changing requirements. 

3. Velocity over mass: Substitute speed and accuracy for large 
investments in inventory. 

4. Maximize throughput: Reduce the number of times that supplies must 
be opened and sorted. 

5. Reduce customer wait time. 

6. Maintain minimum essential stocks: Reduce reliance on large, costly 
stockpiles. 

7. Maintain continuous, seamless, two-way flow of resources: Apply the 
distribution principles to maintain an integrated and seamless 
distribution system. 

8. Achieve time definite delivery: Deliver the right supplies to the 
combatant commander at the right place and time.[Footnote 17]

Figure 3 illustrates the complexity of DOD's joint distribution system. 
The system moves supply items from inventories, vendors, and repair 
facilities in the U.S. to deployed units in the theater. The system 
also returns items to the U.S. for repair and maintenance. 

Figure 3: DOD's Joint Distribution System: 

[See PDF for image]

[End of figure]

Recent Studies of OIF Logistics: 

Several DOD components have recently commissioned assessments of 
logistics operations during OIF with the aim of identifying areas for 
improvement. One study, Objective Assessment of Logistics in Iraq, 
commissioned by the Deputy Under Secretary of Defense (Logistics and 
Materiel Readiness) and the Director for Logistics, Joint Staff, was 
published in 2004 by the Science Applications International Corporation 
(SAIC). This study identified problems with DOD's logistics support and 
contained several recommendations that were endorsed by the Under 
Secretary of Defense (Acquisition, Technology, and Logistics) such as 
synchronizing the distribution chain from the U.S. to CENTCOM's area of 
responsibility and resolving issues with technology. 

Another study, commissioned by the Army Deputy Chief of Staff for 
Logistics, is an independent assessment of the Army's logistics 
experience in OIF by the RAND Corporation's Arroyo Center. This study 
focuses on how Army forces were sustained and the performance of the 
sustainment system during combat operations and initial stability and 
support operations. RAND's report is currently under review by the 
Army. 

Supply Shortages Reduced Operational Capability and Increased Risk to 
Troops in Iraq: 

During OIF, DOD was responsible for moving over 2 million tons of 
supplies and spare parts to theater. U.S. troops experienced shortages 
of seven of the nine items GAO selected for review. According to the 
2004 National Military Strategy, U.S. forces expect to have sufficient 
quantities of the right items at the right time. However, demand for 
the seven items exceeded availability sometime between October 2002 and 
September 2004. The overall impact of these shortages on military 
operations is difficult to quantify because it varied between combat 
units and is not always apparent in DOD's readiness systems. The 
remaining two items that we examined did not experience shortages in 
theater. Detailed case studies for the nine items are in appendixes II- 
X. 

Shortages Occurred during OIF for Seven Critical Items: 

U.S. troops in the OIF theater did not always have sufficient 
quantities of seven items that we reviewed. For some items, the 
shortages occurred primarily during initial troop deployments and major 
combat operations in early 2003; for other items, shortages emerged 
during the sustainment period after major combat operations were 
declared over in May 2003. The overall impact is difficult to quantify 
because it differed between units. For example, while units in the 3rd 
Infantry Division reported that tire shortages affected their mission 
by forcing them to abandon equipment, the 4th Infantry Division 
reported that their tire shortages had no affect on their mission. The 
following describes the shortages for each of the seven items. 

* Generators for AAVs. Marine Corps units in Iraq experienced shortages 
of generators for their AAVs during deployment and combat operations in 
early 2003. The AAV is a landing vehicle that the Marine Corps used as 
an armored personnel carrier in Iraq. Without the generator, which 
provides electric power, the AAV cannot operate. Although 140 
generators were reported shipped from the U.S., Marine forces in 
theater reported receiving only 15. Neither we nor the Marine Corps 
could find the remaining 125 in the supply system. While the service 
did not document any operational impacts specifically due to generator 
shortages, its forces had to strip parts from about 40 nonoperational 
vehicles to maintain the operational capabilities of other vehicles. 

* Track shoes for Abrams Tanks and Bradley Fighting Vehicles. As the 
conflict in Iraq continued, track shoes, essential components of combat 
vehicles such as Abrams tanks and Bradley Fighting Vehicles, were not 
available to meet increasing demands. Although sufficient quantities of 
track shoes existed to meet demand at the beginning of combat, by May 
2003 actual demand was 5 times the forecasted demand primarily because 
of the heavy wear and tear on track shoes as a result of high mileage, 
poor road conditions, and extreme desert heat. Major combat units 
reported that significant shortages of track shoes negatively affected 
their operational capabilities. For example, the 3rd Infantry Division 
reported in June 2003 that 111 (60 percent) of its 185 Abrams tanks 
were unable to perform their missions because of supply shortfalls that 
included track shoes. Furthermore, 159 (67 percent) of the division's 
237 Bradley Fighting Vehicles were not mission capable for the same 
reason. 

* Interceptor Body Armor. Demand for Interceptor body armor[Footnote 
18] exceeded supply during OIF. The Coalition Forces Land Component 
commander decided to increase individual protection by issuing the 
armor to all troops and civilians. As a result, demand for the body 
armor surged, with quarterly demand rising from a pre-war level of 
about 8,600 vests and 9,600 plates, to about 77,000 vests and 109,000 
plates by the time the war commenced on March 2003. Back orders for 
plates peaked at 598,000 in November 2003, while back orders for vests 
reached 328,000 in December. Even though the services did not report 
that the lack of body armor impacted their missions during OIF, there 
were serious concerns. For example, combat support units in the Army 
and Marine Corps were among the last to be equipped with the armor, 
increasing the risk to personnel given the enemy's focus on attacking 
supply routes. 

* Lithium batteries. Army and Marine Corps forces operating in Iraq 
experienced severe shortages of lithium batteries, particularly BA- 
5590s and BA-5390s, during major combat operations in the spring of 
2003. These nonrechargeable batteries power some 60 critical 
communications and electronics systems, such as radios and missile 
guidance systems. Worldwide demand for these batteries surged from a 
peacetime average of below 20,000 per month prior to September 11, 
2001, to a peak rate of over 330,000 in April 2003. As a result, the 
number of back orders rose rapidly to 900,000 by May 2003. According to 
Marine Corps officials, if the war had continued at the same pace into 
May 2003 or beyond, Marine units would have experienced degraded 
communications capability and increased risk as a result of battery 
shortages. 

* MREs. U.S. forces in Iraq experienced shortages of MREs primarily 
during the deployment and major combat phases in February, March, and 
April 2003 before normal dining facilities were established. The peak 
monthly demand for MREs rose to more than 1.8 million cases, while 
inventories dropped to a level of 500,000 cases. In late April when 
other food options became available, demand fell rapidly. While certain 
Army units reported running out of MREs, available data only shows that 
they came close. According to a RAND study, some Army units came within 
an estimated 2 days or less of exhausting their on hand 
quantities.[Footnote 19] Similarly, according to a Center for Naval 
Analysis study, at times Marine Corps combat support units had less 
than 1 day of MREs on hand.[Footnote 20] As a result, both Army and 
Marine Corps units were at risk of running out of food if supply 
distribution was hindered. 

* Tires for 5-ton trucks and HMMWVs. The rising demand for truck tires 
during and after major combat operations in Iraq nearly exhausted 
existing inventories. The demand grew as vehicles were driven long 
distances and were modified with add-on-armor. For example, in August 
2003, the Army's inventory contained only 505 tires for 5-ton trucks, 
which fell far below the worldwide monthly demand of more than 4,800 
tires. As a result, back orders spiked to over 7,000 for 5-ton truck 
tires and to over 13,000 for HMMWV tires. The shortages reduced the 
operational capabilities of these vehicles and negatively impacted 
operations in Iraq. For example, 3rd Infantry Division units reported 
that tire shortages forced them to abandon equipment, and Marine Corps 
units reported stripping and abandoning otherwise good vehicles because 
of a lack of tires. 

* Up-armored HMMWVs and add-on-armor kits. Since the U.S. military 
began identifying requirements for these vehicles during the summer of 
2003, there has been a gap between the number of vehicles required and 
the number being produced by the industrial base. This new requirement 
was based on the need to protect soldiers and Marines executing 
distribution and force protection missions. The up-armored HMMWV 
provides enhanced protection against rifle rounds and explosive blasts 
while the add-on-armor kits[Footnote 21] provide some additional 
protection to previously unarmored vehicles. As of September 2004, only 
5,330 of the 8,105 required vehicles were in theater. The overall 
impact of the shortages of up-armored HMMWVs and add-on-armor kits is 
difficult to measure because units do not report the direct effects of 
using unarmored HMMWVs. However, according to a Center for Army Lessons 
Learned study, the risk of harm to both personnel and equipment from 
improvised explosive devices is greatly reduced when they are 
transported in an up-armored HMMWV. 

Two Items Were Not in Short Supply During OIF: 

Two items we examined--chemical-biological suits and Marine Corps 
helicopter parts--did not experience shortages. In these cases, 
although demands were high because of wartime operations, the defense 
supply system was able to meet the needs of deployed forces. A 
discussion of the availability of the two items follows. 

* Chemical-biological suits. Although there was a perception that 
sufficient quantities of the new Joint Service Lightweight Integrated 
Suit Technology (JSLIST) chemical-biological suits were not available 
during OIF, our work did not identify any actual shortages in the 
theater of operations. Concerns about a shortage of chemical-biological 
suits arose as a result of an October 2002 Congressional request that 
DOD provide suits to all military and civilian personnel located in the 
OIF theater.[Footnote 22] However, according to DLA, the contracting 
agent for chemical-biological suits, and our analysis,[Footnote 23] 
there were sufficient quantities of the suits in the inventory to meet 
the suit demand during OIF. 

* Marine Corps helicopter rotor blades. Although concerns were raised 
about shortages of helicopter parts for Marine Corps helicopters, 
specifically rotor blades, we did not identify any shortages in the 
theater of operations. Marine Corps officials reported there were no 
rotor blade shortages and our analysis of supply data confirms this. In 
addition, the mission capable rates during OIF for the two helicopters 
we reviewed--the UH-1N and the CH-53E--were comparable to peacetime 
rates. 

Impact of Shortages Was Not Always Apparent in DOD's Readiness 
Reporting System: 

We were not always able to identify the impact of specific shortages 
because, although DOD's supply system showed shortages of items in 
theater, DOD's readiness reporting systems did not always show the 
impact of these shortages on unit operational capability. Such systems 
as the Global Status of Resources and Training System and Unit Status 
Reports are intended to identify the ability of units to accomplish 
their missions and the problems affecting mission performance each 
month. In addition, other reporting mechanisms, such as lessons learned 
reports or after-action reports, may also disclose the impact of 
shortages on operations but do not tie directly to readiness reporting. 
As a result, we used a variety of documents, some obtained directly 
from the units, to identify the impact of supply shortages. 

For our nine items, the information reported through the various 
readiness systems, in some cases, was inconsistent with the impact 
cited in reports. For example, in July 2003, unit status reports from 
the 4th Infantry Division's battalions showed that approximately 145 to 
150 of their 176 Bradley Fighting Vehicles were mission capable, 
translating to a mission capability rate of around 84 percent. However, 
a May 2004 lessons learned report prepared by the division indicated 
that the overall mission capability rate for its Bradleys was 32 
percent during the July 2003 time frame and that the degraded status 
was due to a shortage of armored vehicle track shoes and other vehicle 
suspension items. In a June 2003 status report, four of the 3rd 
Infantry Division's five infantry battalions reported that 65 percent 
of their Bradley vehicles were mission capable. However a 3rd Infantry 
Division report for June 2003 showed that 65 percent of the division's 
Bradleys were non-mission capable because of supply-related reasons, 
which unit officials attributed almost exclusively to track shoe 
shortages. 

There were also instances of readiness information about unit status in 
Iraq not being reported. For example, in August 2003, the 4th Infantry 
Division's five Armor battalions and one Calvary unit did not enter any 
mission capability data into the readiness reporting systems about the 
status of their 247 Abrams tanks. However, the May 2004 briefing report 
prepared by the division indicated that by July 2003, 28 percent of the 
division's tanks were non-mission capable. The primary reason given was 
lack of tank shoes and related suspension parts. 

Multiple Supply Chain Deficiencies Contributed to Supply Shortages: 

Five deficiencies contributed to shortages in the supply of seven of 
the nine items that we studied. According to DOD data and contractor 
studies, these deficiencies also affected other items in the supply 
system. The deficiencies were (1) inaccurate and inadequately funded 
Army war reserve requirements, (2) inaccurate supply forecasts, (3) 
insufficient and delayed funding, (4) delayed acquisition, and (5) 
ineffective distribution. Table 3 identifies the deficiencies that 
affected each of the seven supply items. 

Table 3: Systemic Deficiencies Contributing to Shortages of Seven 
Supply Items: 

Item: AAV generators; 
Ineffective distribution. 

Item: Armored vehicle track shoes; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding. 

Item: Interceptor body armor; 

Delayed acquisition; 
Ineffective distribution. 

Item: Lithium batteries; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Delayed acquisition. 

Item: MREs; 
Inaccurate supply forecasts; 
Ineffective distribution. 

Item: Tires for 5-ton trucks and HMMWVs; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Ineffective distribution. 

Item: Up-armored HMMWVs and add-on-armor kits; 
Delayed acquisition. 

Source: GAO analysis. 

[End of table]

Inaccurate and Inadequately Funded Army War Reserve Requirements for 
Spare Parts Led to Early Shortages during OIF: 

The inaccurate requirements for and poor funding of war reserves 
affected the availability of three of the supply items (armored vehicle 
track shoes, lithium batteries, and tires). Annual updates of the 
Army's war reserve requirements for supply items have not been 
conducted and, as a result, the Army did not have an accurate estimate 
of the spare parts and other items needed for a contingency such as 
OIF. In addition, over the past decade, the Army underfunded its war 
reserve spare parts, which has forced managers to allocate money for 
certain items and not for others. 

Army War Reserve Spare Parts Requirements Were Out of Date and 
Inventory Was Inadequate: 

Army officials told us that annual updates of its war reserve 
requirements for spare parts have not been conducted since 1999. AMC 
uses a computer model, called the Army War Reserve Automated Process, 
to determine its requirements for spare parts in the war reserve. This 
model is supposed to be run on the basis of annually updated defense 
planning guidance and is designed to support the latest war plans and 
Army force structure. According to AMC officials, the model has not 
been run since 1999 because the Department of the Army has not provided 
the latest guidance, which details the force structure and operations 
that the Army's war reserve must support. However, an Army official 
provided us with copies of the Army guidance from 2001, 2003, and 2005 
that AMC could have used to initiate computation of war reserve 
requirements. The Army official stated that AMC did not run the model 
for a variety of reasons such as support for ongoing missions and 
problems with the implementation of a new database and modeling 
system.[Footnote 24]

Because the requirements were out-of-date, the war reserve inventories 
for some spare parts were inadequate and could not meet initial wartime 
demands. For example, the war reserve requirement for nonrechargeable 
lithium batteries (BA-5590s) was not sufficient to support initial 
operations in OIF. The requirement for BA-5590s was set at 180,000 to 
support the first 45 days of operations, but this amount was 
considerably lower than the actual demand of nearly 620,000 batteries 
recorded during the first 2 months of the conflict. CECOM officials 
attributed this mismatch to inaccurate battery failure and usage rates 
in the 1999 model. They also said the model did not include all the 
communications systems that used nonrechargeable lithium batteries. 

In another example, the war reserve requirement for track shoes for 
armored vehicles was inadequate to keep pace with actual demand during 
the early months of combat. As table 4 shows, the pre-OIF war reserve 
requirement for track shoes for Abrams tanks and Bradley Fighting 
Vehicles was, respectively, 5,230 and 5,626; however, in April 2003 the 
actual worldwide demand for these tanks was four times higher. The 
situation was even worse for 5-ton truck tires. 

Table 4: War Reserve Requirements, On-Hand Stock, and Items Requested 
Worldwide: 

Supply item: Track shoe (Abrams); 
War reserve requirement (March 2003): 5,230; 
War reserve on hand (March 2003): 5,623; 
Items requested worldwide (April 2003): 23,462. 

Supply item: Track shoe (Bradley); 
War reserve requirement (March 2003): 5,626; 
War reserve on hand (March 2003): 5,695; 
Items requested worldwide (April 2003): 20,678. 

Supply item: 5-ton truck tire; 
War reserve requirement (March 2003): 259; 
War reserve on hand (March 2003): 16; 
Items requested worldwide (April 2003): 4,800. 

Source: TACOM. 

[End of table]

Since the end of major combat operations, war reserve managers have 
made manual adjustments to the requirements to reflect supply 
experiences from OIF. For example, officials told us that they have 
adjusted the Army and the Marine Corps war reserve requirement for BA-
5590 and BA-5390 lithium batteries upward to more than 1.5 million 
batteries based on the average monthly demand of 250,000 batteries 
experienced during OIF multiplied by 6 months. Similarly, war reserve 
managers at TACOM have increased the requirements for Abrams and 
Bradley tank track shoes to 32,686 and 34,864, respectively. While 
these actions may correct a particular problem, they do not address the 
systemic inaccuracy of the Army's war reserve requirements. 

In prior reports, we have identified problems with the Army's process 
for computing the war reserve spare parts requirements. In a 2001 
report, we recommended that the Secretary of Defense direct the 
Secretary of the Army to develop and use the best available consumption 
factors; improve the methodology used to determine requirements by 
considering planned battlefield maintenance practices; and develop 
industrial-base capacity on current, fact-based estimates for the war 
reserve.[Footnote 25] In a 2002 report, we recommended that the 
Secretary of Defense direct the Secretary of the Army to have the 
Commander of AMC change its process of calculating war reserve 
requirements. [Footnote 26] While the Office of the Secretary of 
Defense concurred with these recommendations, the Army has yet to 
implement them. 

Risk Management Decisions Led to Years of Low Army War Reserve Funding: 

The Army's war reserve requirements for spare parts have been 
significantly underfunded for many years, indicating that the Army has 
made a risk management decision to not fully fund them. In November 
1999, Army documents indicated that the Army had only $1.3 billion in 
parts prepositioned, or otherwise set aside for war reserves, to meet 
its stated requirement of $3.3 billion. AMC data indicate that a lack 
of funding for war reserve spare parts continues to be an issue. As 
table 5 shows, as of October 2004, only about 24 percent ($561.7 
million out of $2,327.4 million) of AMC's total spare parts requirement 
is currently funded and on hand. Moreover, AMC data show this pattern 
of underfunding is expected to continue through fiscal year 2009. 

Table 5: Status of On-Hand Army War Reserve Spare Parts Requirements as 
of October 2004: 

Dollars in millions; 

Major subordinate commands: Aviation and Missile Command: Aviation; 
Requirement: $331.5; 
Value on hand: $56.1; 
Percentage filled: 16.9%. 

Major subordinate commands: Aviation and Missile Command: Missiles; 
Requirement: $98.9; 
Value on hand: $26.8; 
Percentage filled: 27.1%. 

Major subordinate commands: Communications-Electronics Command; 
Requirement: $344.2; 
Value on hand: $81.6; 
Percentage filled: 23.7%. 

Major subordinate commands: Secondary Item Control Division[A]: 
Requirement: $197.0; 
Value on hand: $30.2; 
Percentage filled: 15.3%. 

Major subordinate commands: Tank-automotive and Armaments Command: 
Armaments; 
Requirement: $245.4; 
Value on hand: $70.7; 
Percentage filled: 28.8%. 

Major subordinate commands: Tank-automotive and Armaments Command: 
Biological and chemical equipment; 
Requirement: $117.8; 
Value on hand: $57.0; 
Percentage filled: 48.4%. 

Major subordinate commands: Tank-automotive and Armaments Command: 
Automotive parts; 
Requirement: $992.5; 
Value on hand: $239.3; 
Percentage filled: 24.1%. 

Total; 
Requirement: $2,327.4; 
Value on hand: $561.7; 

Source: Army Materiel Command. 

Note: Totals do not add due to rounding. 

[A] The Secondary Item Control Division is responsible for items 
managed by agencies outside of AMC, such as DLA or the General Services 
Administration. 

[End of table]

As a result of this low funding, war reserve managers told us that they 
must prioritize how the available funding is allocated based on their 
professional experience. For example, the war reserve manager for TACOM 
reported that he tends to spend his available funds on expensive items 
with long production lead-times, such as tank engines, because they are 
difficult to acquire on short notice. Conversely, lower cost items with 
shorter production lead-times, such as tires, do not receive funding 
priority. 

The Army accepts the risk of unfunded war reserve requirements in order 
to fund other priorities, such as operations and the procurement of new 
systems. Although, the Army has reported the amount of war reserve 
underfunding to Congress, the risk of not funding the war reserve is 
not clearly stated. 

Army Supply Forecasts Did Not Accurately Represent Troop Needs in OIF: 

The Army's requirements process did not accurately forecast the 
supplies needed to support U.S. forces during OIF for four of the items 
we studied (armored vehicle track shoes, lithium batteries, MREs, and 
tires). As indicated by Army regulation,[Footnote 27] AMC normally uses 
a computer model to forecast its spare and repair parts requirements. 
The model uses the average monthly demand over the previous 24 months 
to predict future equipment use and demand. Although the Army 
regulation[Footnote 28] indicates that the model should be able to 
switch to a wartime demand forecasting method, AMC officials stated the 
system has no wartime forecasting capability. As a result, the Army's 
supply requirements forecasting model could not forecast the wartime 
surge in requirements during OIF. In contrast, DLA's model has the 
capability to forecast requirements for contingencies, but it was not 
completely effective, as in the case of MREs. 

Instead of using the model, the Army relied on the expert opinion of 
item managers, who manage supply items at AMC's subordinate commands. 
Item managers, however, did not have sufficient information on 
estimated deployment sizes or duration and intensity of operations to 
accurately forecast supply requirements for OIF. According to TACOM 
officials, AMC initially directed item managers to use their expert 
opinion and knowledge to develop forecasts, without input from 
operational planners in CENTCOM. AMC officials stated that Army 
headquarters did not provide them with formal guidance on the duration 
of the conflict, supply consumption, or size of the deploying force. 
AMC documents show and their contractors confirm that AMC gathered some 
anecdotal information on force size and the duration of operations in 
November 2002. However, item managers at AMC's subordinate commands 
reported they did not always receive adequate guidance from AMC. For 
example, officials at TACOM stated they did not receive planning 
guidance on operational plans from AMC to incorporate into their 
forecasts of track shoe or tire requirements. The forecasted monthly 
requirement for Abrams track shoes was 11,125, which was less than half 
of the actual requirement of 23,462 shoes in April 2003. Forecasts for 
5-ton truck tires were also inaccurate. Worldwide demand was forecasted 
at 1,497 tires during April 2003, less than a third of the actual 
demand of 4,800. 

In contrast, officials at CECOM reported that in the summer of 2002, 
operational planners consulted them about the number of nonrechargeable 
lithium batteries needed to support operations. Subsequently, CECOM 
officials presented these new requirements to AMC and the Joint 
Materiel Priorities and Allocation Board and received $38.2 million in 
additional obligation authority for BA-5590 and BA-5390 
batteries.[Footnote 29] Despite these efforts, demand for batteries 
outpaced production during OIF combat operations. 

The Marines forecast supply requirements for their initial operations 
based on operational plans[Footnote 30] and modeling factors that 
involve both operational and logistics planners. Modeling factors 
include historical supply data, number of personnel involved in an 
operation, distance of operation, and number of days of operation. 
Normally, the forecasting process includes many echelons of Marine 
Corps command. Initially, the 1st Marine Expeditionary Force 
headquarters provides operational plans to the deploying units that 
determine the supply requirements for an operation. Once the deploying 
units forecast a supply requirement, it is returned to headquarters for 
review. Deploying units review the supply requirements again before 
passing them to the Marine Forces Pacific Command for final assessment. 
The Marine Corps Logistics Command, the service's integrated logistics 
manager, sends the requirements to DLA and other supply providers. 
Supply providers then inform the Logistics Command and the deploying 
units about their ability to fill the forecasted requirements. 
According to the Marines, they used this process to forecast supply 
requirements before deploying to OIF. 

After the end of major combat operations, the Marine Corps began an 
after-action review process to analyze the effectiveness of their OIF 
supply forecast. As part of this analysis, the 1st Marine Expeditionary 
Force assessed the correlation between supply forecasts and supply 
usage. This analysis showed that 88 percent of the types of repairable 
supply items forecasted were actually needed,[Footnote 31] and 62 
percent of the types of consumable items forecasted were demanded, in 
the first 90 days. These data indicate that a significant number of 
unneeded items could have been sent to theater, placing an unnecessary 
burden on the distribution system. However, the Marine Corps has not 
analyzed the accuracy of whether the quantities forecasted equaled the 
quantities needed. Without such analysis, the Marines cannot determine 
if their forecasting process provided them with the right items in the 
right quantity at the right time during OIF. 

Insufficient and Delayed Funding Limited the Availability of Supply 
Items for OIF: 

A lack of sufficient funding (obligation authority) within the Army's 
working capital fund and delays with the release of funds limited the 
availability of three reviewed items (armored vehicles track shoes, 
lithium batteries, and tires). The delays may have been due to the 
Army's multi-stage process to validate requirements. In contrast, DLA's 
working capital fund was able to move sufficient obligation authority 
among accounts to support rapidly increasing demands. 

AMC Did Not Receive Sufficient Obligation Authority from the Department 
of the Army to Meet Spare Parts Requirements Promptly: 

According to a DOD regulation,[Footnote 32] DOD components are supposed 
to structure their supply chain processes and systems to provide 
flexible and prompt support during crises. However, during fiscal year 
2003, AMC did not promptly receive obligation authority to match its 
stated requirements. The Department of the Army released $2.9 billion 
of obligation authority into the Army Working Capital Fund to buy 
supplies in October 2002 as part of the fiscal year 2003 budget cycle 
(see fig. 4). This amount was based on the requirements established in 
the President's Budget prepared 2 years earlier. By the time fiscal 
year 2003 began, AMC had identified a new supply requirement of $4.8 
billion to support both peacetime operations and the ongoing global war 
on terrorism, but, the obligation authority provided in October 2002 
did not support this revised requirement. While Army headquarters 
provided some additional funding to AMC, AMC increased its supply 
requirements again in March 2003 to $5.6 billion. However, the total 
obligation authority AMC received at that time equaled only $4.7 
billion. AMC did not receive sufficient obligation authority to support 
the final validated requirements of nearly $6.9 billion until the end 
of fiscal year 2003, 4 months after major combat operations ended. 

Figure 4: Fiscal Year 2003 Army Working Capital Fund Supply Management 
Requirements and Cumulative Obligation Authority Received: 

[See PDF for image]

Notes: 

(1) Reset is a term used to define bringing a vehicle that was used 
during Operation Enduring Freedom and OIF back to a fully mission- 
capable (serviceable) condition. Resetting a vehicle involves extensive 
use of spare parts. 

(2) Numbers are rounded to the nearest tenth of a billion dollars. 

[End of figure]

In addition to establishing requirements to support its peacetime and 
continuing global war on terrorism operations, AMC identified 
additional requirements, called reset requirements, of $1.3 billion to 
support the repair of items coming back from theater. As figure 4 
shows, by the end of fiscal year 2003, AMC had received $6.9 billion of 
its total requirement of $8.2 billion (including reset) in obligation 
authority, a shortfall of $1.3 billion. 

We could not determine exactly why sufficient funding was not provided 
to AMC more quickly, because sufficient records were not available to 
track when AMC and its subordinate commands requested additional 
funding from Army headquarters or the amounts requested. Similarly, 
Army headquarters could not provide information about the timing of its 
requests for additional obligation authority to the Office of the Under 
Secretary of Defense (Comptroller). However, the Army's requirements 
validation process likely contributed to delays in the release of 
obligation authority into AMC's Army Working Capital Fund. After AMC 
completes its internal validation process and requests additional 
funding above the programmed requirement during the year of execution, 
several organizations within Army headquarters reexamine AMC's 
requirements. In the absence of specific direction in Army regulations, 
Army headquarters has developed a process for validating AMC's 
requirements. While the Office of the Deputy Chief of Staff for 
Logistics has the main responsibility for validating AMC's functional 
requirements, the Office of Deputy Chief of Staff for Operations, the 
Office of the Deputy Chief of Staff for Program and Analysis, and the 
Assistant Secretary of Army (Financial Management and Comptroller) must 
also review and agree on the requirements. Once these organizations 
validate the requirements, the Assistant Secretary of the Army 
(Financial Management and Comptroller) requests obligation authority 
from the DOD Comptroller. This lengthy process may have delayed the 
release of funds and contributed to shortages of tires, track shoes, 
and lithium batteries. 

The additional time associated with the Army's validation process was 
exemplified by events during fiscal year 2003. AMC set its revised 
supply requirements to $4.8 billion in October 2002. However, the DOD 
Comptroller did not release the first additional obligation authority 
of $600 million until January 2003, 3 months later. Army headquarters 
office released its next increase of obligation authority of $1.1 
billion in March 2003, for a total of $4.6 billion; nearly 6 months 
after AMC identified the initial requirement. Army officials were 
unable to tell us when they had submitted their requirements to the DOD 
Comptroller because they said they often submitted requests for 
additional obligation authority during the fiscal year informally via e-
mails and telephone calls. Accordingly, detailed records were not kept. 
We were able to confirm that the time between the releases of 
obligation authority from the DOD Comptroller to the department of the 
Army did not take longer than two weeks. This indicates that for most 
of the 6 months, AMC's request for additional obligation authority was 
somewhere in the Department of Army's validation process. 

In addition to delays in receiving funds, AMC suffered from an overall 
lack of sufficient obligation authority for its major subordinate 
commands that contributed directly to shortages of tires, track shoes, 
and lithium batteries during OIF. Initial priority was to provide 
funding to the U.S. Army Aviation and Missile Command to support 
critical aviation systems and then to TACOM for tracked and tactical 
wheeled vehicles. Without prompt obligation authority, item managers 
could not contract for supplies in anticipation of customer demands. 
According to item managers, they need sufficient obligation authority 
in advance of customer demands in order to have sufficient supplies 
available. TACOM officials reported that the lack of adequate 
obligation authority prevented them from buying supplies, including 
tires and tank track shoes, in anticipation of demands. For example, in 
October 2002, TACOM item managers identified total requirements of 
nearly $1.4 billion, but only had authority to obligate approximately 
$900 million. By May 2003, TACOM's requirements had increased to over 
$2.1 billion, but only $1.5 billion in obligation authority was 
available. By the end of the fiscal year, TACOM's total requirement, 
including funds necessary to reset the force, totaled $2.7 billion, but 
its obligation authority was less than $2.4 billion. This shows that 
obligation authority for tires and tank track shoes lagged behind 
requirements, thereby preventing item managers from buying supplies in 
anticipation of demand. Similarly, CECOM reported that unfunded 
requirements over several prior years affected its purchases of lithium 
batteries. CECOM identified requirements of nearly $1.5 billion for 
fiscal year 2003, but received less than $1.1 billion in obligation 
authority for the year. 

DLA Received Sufficient Obligation Authority to Meet Customer Supply 
Needs: 

In contrast to the Army, DLA received sufficient obligation authority 
from the DOD Comptroller to meet increasing customer supply needs 
during OIF. DLA set the requirements for its supply management business 
area at $18.1 billion and received $16.5 billion of this amount in 
obligation authority in October 2002 (see fig. 5). By February 2003, it 
had received obligation authority that kept pace with increasing 
requirements. As requirements increased during OIF, the agency was able 
to request and receive additional obligation authority to purchase 
supplies in anticipation of customer needs. By the end of the fiscal 
year, DLA's supply requirements had reached $25.0 billion, and it had 
received an equal amount of obligation authority to meet those 
requirements. 

Figure 5: Fiscal Year 2003 DLA Supply Management Requirements and 
Cumulative Obligation Authority Received: 

[See PDF for image]

[End of figure]

DLA officials told us they were able to obtain timely increases in 
obligation authority from the DOD Comptroller because of their 
requirements validation process. The agency conducts an ongoing review 
of its requirements throughout the year to ensure they are updated as 
changes in demand occur. Agency officials then request additional 
obligation authority directly from the DOD Comptroller. This process 
allowed DLA to submit requirements and receive increased obligation 
authority several times during fiscal year 2003. Agency officials 
stated that having accurate requirements ensures that the DOD 
Comptroller accepts the requirements without further validation. 
According to DLA officials, the DOD Comptroller was responsive to the 
agency's needs, providing additional obligation authority within days 
of a request. 

Delayed Acquisition Caused by a Variety of Challenges: 

The supply system faced several challenges in rapidly acquiring three 
of the items we reviewed to meet the emerging demands caused by OIF 
(Interceptor body armor, lithium batteries, and up-armored HMMWVs and 
kits). According to a DOD regulation,[Footnote 33] supply chain 
processes and systems, which include relationships with commercial 
manufacturers, should provide flexible and prompt support during 
crises. The rapid increase in demand for the three items was not 
anticipated, and as DOD's supply system attempted to purchase them, its 
efforts were impeded by problems that varied by item. For example, 
while lithium battery production was limited by the capacity of a sole 
source supplier and long production lead-times, body armor 
manufacturers faced shortages of the material components of the armor. 

Body Armor Production Did Not Support Increasing Demands: 

DLA data show that manufacturers of body armor could not meet the surge 
in demand for the item's two primary components, plates and vests. For 
example, the worldwide demand for plates increased from 9,586 in 
December 2002 to 108,808 in March 2003 to a peak of 478,541 in December 
2003. A comparison of plate production rates over the same time period 
shows that only 3,888 plates were produced during December 2002, 31,162 
during March 2003, and 49,746 during December 2003. 

Increasing requirements exceeded the manufacturer's capacity to produce 
sufficient body armor. For example, in October 2003, CENTCOM expanded 
requirements for body armor to include all U.S. personnel in its area 
of responsibility. The industrial base could not meet this new 
requirement due to a lack of construction materials and long production 
lead-times. Vest production was hindered by the limited availability of 
Kevlar; plate production was initially slowed due to a lack of a 
special backing for the plates and later by the limited availability of 
the primary component of the plates, ceramic tiles. In addition, the 
minimum production lead-time of 3 months limited the manufacturers' 
ability to accelerate production levels to meet increasing demand, 
especially for plates, which are more difficult to manufacture than 
vests. Due to these industrial-base limitations, body armor was not 
issued to all troops in Iraq until January 2004, 8 months after major 
combat operations were declared over. 

Lithium Battery Production Did Not Support Increasing Demands: 

Demand for lithium batteries exceeded inventory and production during 
OIF. As mentioned earlier in this report, the requirement for lithium 
batteries had not been assessed for the war reserve for several years. 
Worldwide demand for lithium batteries increased from 38,956 batteries 
per month in October 2001 to a peak of 330,600 in April 2003. 
Concurrent battery production was 32,000 in October 2001 and 114,772 in 
April 2003, and thus was insufficient to meet demand. CECOM expanded 
battery production from one to three manufacturers and received $38.2 
million to increase production capacity in late 2002; the 8-fold 
increase in battery demand still outstripped production capacity. A 6- 
month production lead-time for the batteries precluded the ability of 
the three manufacturers to meet the peak demand during April 2003. The 
Marines reported being down to only a 2-day supply of batteries in 
CENTCOM's area of responsibility in April 2003, despite OIF's priority 
on worldwide supply shipments. By late 2003, the Army was able to 
acquire enough batteries so that its inventory exceeded back orders. 

Pace of Production of Up-Armored HMMWVs and Kits Did Not Match Maximum 
Capacity: 

Meeting rapidly increasing requirements for armoring HMMWVs also met 
with constraints. For example, CENTCOM stated a requirement for 1,407 
up-armored HMMWVs to support OIF in August 2003 that grew to 8,105 
vehicles in September 2004. Manufacturers were producing 51 up-armored 
HMMWVs per month in August 2003. Recognizing the increase in 
requirements in February 2004, the Army reached an agreement with the 
manufacturers to increase production to 460 vehicles per month by 
October 2004. However, the signed agreement with the manufacturer 
indicated that maximum production could have been increased to 500 
vehicles. 

Funding was not available when the requirements increased. As a result, 
Army officials stated that the up-armored HMMWV manufacturers were 
unable to operate at the maximum capacity. In order to produce vehicles 
at a consistent and high rate, the manufacturer needs to be assured of 
consistent funding at least 3 months in advance of delivery. While 
additional funding was received in fiscal year 2004, program managers 
stated they often did not know when the next funding release would 
occur, further complicating their procurement planning. As of September 
2004, Army data shows that 5,330 of the 8,105 required up-armored 
HMMWVs were in CENTCOM's area of responsibility. 

Similar issues affected the delivery of add-on-armor kits from the 
Army's depot system even more dramatically. Kit production in the 
Army's depot system reached its maximum rate of 3,998 kits per month in 
April 2004 and would have met the requirement sooner had the Army not 
slowed production. Moreover, additional unused capacity was available 
for kit production. In February 2004, a contractor-operated Army 
facility informed Army depot managers that it could produce an 
additional 800 kits per month. While item managers stated they did not 
use this contractor-operated facility due to issues with contract 
timing and price, they did not have information about the reason for 
reducing the level of production at the government-operated facilities. 
Army data show that kit production will meet CENTCOM's September 2004 
requirement for 13,872 kits no later than March 2005. 

DOD's Response to Acquisition Challenge Was Inconsistent: 

DOD's response to the various acquisition challenges presented by these 
items was inconsistent, lacked transparency, and did not fully exploit 
all of its capabilities to influence production. If the Army had 
forecasted an accurate requirement for the batteries, the need for 
additional manufacturers would have been recognized and production 
capacity could have been increased on time to better meet the demand. 
In the case of the other two items, the rapid increase in demand was 
not as predictable and DOD responded differently to each. DOD officials 
made a very aggressive effort to focus on and improve the availability 
of body armor using regulatory authority to increase production. DOD 
also provided visibility over the problem and courses of action to 
Congress. By contrast, DOD's response to the need for more armor 
protection for HMMWVs was more measured and its acquisition solution 
was less transparent. This may have been why members of Congress have 
expressed specific concerns about the availability of these items and 
designated specific funds for them. 

Ineffective Theater Distribution Contributed to Shortages of Supply 
Items: 

DOD's inability to distribute sufficient quantities of items to troops 
adversely affected the delivery of many items. While all seven items 
may have experienced distribution problems, we found that four items 
(AAV generators, Interceptor body armor, MREs, and tires) were directly 
and negatively affected, causing troops to experience shortfalls. 
Distribution is the operational process of synchronizing all elements 
of the logistics system to deliver the "right things" to the "right 
place" at the "right time" to support the combatant commander. This 
complex process involves the precise integration of doctrine,[Footnote 
34] transport equipment, personnel, and information technology. Among 
the problems encountered during OIF were (1) conflicting doctrine 
defining the authority of the geographic combatant commander to 
synchronize the distribution of supplies from the U.S. to theater; (2) 
improper packaging of air shipments from the U.S., which forced 
personnel in theater to spend time opening and sorting shipments as 
they arrived; (3) insufficient transportation equipment and supply 
personnel in theater; and (4) the inability of logistics information 
systems to support the requisition and shipment of supplies into and 
through Iraq. 

Conflicting Doctrine Impeded Effective Distribution: 

We found that conflicting doctrine impeded the establishment of a 
distribution system capable of delivering supplies to the warfighter 
smoothly and on time. Distribution begins with the supplier, ends with 
the warfighter, and includes all systems, both physical and 
informational, needed to move and manage supplies between the two ends. 
Currently, joint doctrine institutionalizes separate management of 
sections of the end-to-end distribution system by placing 
responsibility for logistics support outside the theater with the 
individual services and the U.S. Transportation Command.[Footnote 35] 
However, it also requires the theater commander to synchronize all 
aspects of logistics necessary to support the mission.[Footnote 36] 
This conflicting doctrine is contrary to DOD's distribution principle 
of centralized management, which prescribes that one manager should be 
responsible for the end-to-end distribution of supplies. A SAIC study 
also reports that joint doctrine does not contain any specific or 
prescriptive guidance on how the combatant commander might ensure a 
seamless distribution process.[Footnote 37]

During OIF, the CENTCOM combatant commander could not synchronize the 
distribution process to support the mission, as required by doctrine, 
with the level of control that joint doctrine suggests. Instead, the 
combatant commander had to rely on other DOD components responsible for 
different functions along the distribution process to gain end-to- end 
visibility as supplies moved through the distribution system. For 
example, as we reported in December 2003,[Footnote 38] although CENTCOM 
issued a policy requiring the use of radio frequency identification 
tags on all shipments,[Footnote 39] to track assets shipped to and 
within the theater, tags were not always used. Officials from various 
DOD components reported that, while no data were compiled on the 
frequency of shipments being labeled with radio frequency 
identification tags, only about 30 percent of the pallets and 
containers coming into the theater were tagged. Officials gave various 
reasons for not following the commander's policy, such as personnel 
were not trained to use the technology, tags were not available to 
place on loads moving through the system, and requirements to use the 
technology were not compatible with current operating systems. In 
addition, some Army officials reported that CENTCOM does not have 
jurisdiction over their process for shipping and tracking assets. 
Therefore, while CENTCOM issued guidance directing the implementation 
of an in-transit visibility system that relied on the tags, the command 
could not control the organizations outside of theater responsible for 
applying the tags to ensure their proper use. 

Initial Shipments from the U.S. to the Theater Were Not Properly 
Packaged: 

DOD's distribution principle of maximizing throughput calls for 
reducing the number of times that supplies are opened and sorted in 
transit so that distribution to warfighters is prompt. Early in OIF, 
inefficient packaging and palletizing of air shipments created supply 
backlogs in Kuwait. In turn, these backlogs delayed the delivery of 
supplies shipped by air to units in Iraq, which included armored 
vehicle track shoes, body armor, and tires. Insufficient information 
was available to allow us to link how each individual item was affected 
by this distribution problem. 

According to Army officials, shipments move most efficiently when they 
are packed and palletized[Footnote 40] so that they do not have to be 
unpacked and reloaded while in transit; sending such "pure" shipments 
to a single unit is a standard peacetime procedure. During OIF, Army 
officials expected each pallet or container to contain supplies for 
only one unit or location. However, initial shipments included spare 
parts and supplies for several geographically separate units. DLA 
officials stated that U.S. distribution centers could not handle the 
high volume of supplies and many shipments were loaded with items for 
more than one customer or "mixed." They also said that the volume of 
supplies arriving daily for consolidation into air shipments 
overwhelmed distribution centers in the U.S. The facilities were 
structured to handle peacetime requirements and lacked the necessary 
equipment and personnel to handle the surge capacity associated with 
wartime. Officials stated that mixed cargo was often sent to the 
theater without being sorted in order to make room for incoming 
supplies. Moreover, the lack of sorting continued because of a 
miscommunication between CENTCOM and DLA, the shipper. CENTCOM expected 
the peacetime practice of pure pallets would continue during OIF, while 
DLA officials focused on moving pallets to theater regardless of 
whether they were pure or mixed. However, at that same time RAND 
analysts reported that DLA facilities were sending pure pallets to U.S. 
Army units in Europe and Korea. 

Once in theater, mixed shipments had to be manually opened, sorted, and 
re-palletized at theater distribution points, causing additional 
delays. According to staff at the Theater Distribution Center in 
Kuwait, some mixed shipments were not marked with all the intended 
destinations so the contents of the shipments had to be examined. Army 
officials stated that because mixed pallets of supplies were initially 
sent to theater, over 9,000 pallets piled up at the center. By the fall 
of 2003, 30 percent of the pallets arriving at the center still had to 
be reconfigured in some way. The Army and DLA recognized the problem 
and worked in conjunction with CENTCOM to establish a "pure palleting" 
process at the distribution center in Pennsylvania. This resulted in 
potentially longer processing times in the United States in order 
reduce customer wait time in theater. 

According to a RAND study,[Footnote 41] the pallets arriving in theater 
between January and August 2003 contained more than 20,000 cardboard 
boxes of small items. Over 4,300 boxes, about one in every five, were 
mixed and may have been opened and the contents sorted before being 
forwarded on to customers, which further delayed delivery. The RAND 
study showed that it took an average of 25 to 30 days for such mixed 
boxes to travel from a port in theater, through the theater center, to 
the supply activity that ordered it. In contrast, when a box with items 
for only one unit was shipped, it took an average of 5 to 10 days to 
reach the customer. 

Shortages of Supply Personnel and Transportation Equipment Hampered 
Supply Distribution: 

The lack of sufficient logistics resources, such as trained supply 
personnel and cargo trucks, hindered DOD's efforts to move supplies 
promptly from ports and theater distribution centers to the units that 
had ordered them, as expected under the DOD principle of optimizing the 
distribution system. As a result, some troops experienced delays in 
receiving MREs and other supplies, thereby reducing operational 
capabilities and increasing risk. 

According to military personnel, there was a shortage of support 
personnel in theater prior to and during the arrival of combat forces. 
Moreover, those that arrived were often untrained or not skilled in the 
duties they were asked to perform. The effects of these shortages of 
trained personnel were most evident at the Theater Distribution Center 
and resulted in delays in the processing (receipt, sorting, and 
forwarding) of supplies, and backlogs. For example, in the late 
February to early March 2003 time frame, the Center had only about 200 
reserve personnel and did not reach its authorized staffing level of 
965 supply/support personnel until May 2003. Moreover, when the center 
opened, it already had an estimated 5,000-pallet backlog and its 
commander employed ad hoc work details drawn from surrounding support 
units to help. Furthermore, organizations outside of the theater, such 
as TACOM, sent personnel to Kuwait to ensure that specific items, such 
as tires, were properly processed and sent to the correct customers. 

Moreover, according to after-action reports, lessons learned studies, 
and discussions with military personnel, the lack of adequate ground 
transportation, especially cargo trucks, contributed significantly to 
the distribution problems. For example, an Army official with the 377th 
Theater Support Command, which was responsible for logistics support in 
Kuwait, stated that when combat began his unit needed 930 light/medium 
and medium trucks but had only 515 trucks on hand. Although his unit 
"managed" with what was available, he said that the shortage of 
equipment used to haul supplies into Iraq created a strain on materiel 
movement. Both the Marine Corps and the 3rd Infantry Division also 
reported that available transportation assets could not meet their 
capacity requirements. Even high-priority items, such as food did not 
always move as intended. According to a CENTCOM after- action report, 
contractors responsible for moving MREs from ports to the Theater 
Distribution Center at times had only 50 of the 80 trucks needed. DLA 
officials reported that at one time 1.4 million MREs were stored at a 
port in theater, awaiting transport to customers. 

One cause for the distribution resource problems was the failure of the 
force deployment planning process to properly synchronize the flow of 
combat and support forces. DOD normally uses time-phased force 
deployment data to identify and synchronize the flow of forces during 
an operation. Key elements of this process include requirements for 
military transportation companies, contractor provided services, and 
host nation logistics support. However, the process was "thrown out" in 
the planning leading up to OIF. Around November 2002, DOD started to 
use another method for deployment planning, referred to as the Request 
for Forces process. 

The Request for Forces process segregated the initial deployment plan 
into over 50 separate deployment orders. DOD's priority was for combat 
forces to move into theater first. Under this new process, logistics 
unit commanders had to justify the flow of their units and equipment 
into the theater--often with little success. According to some DOD 
planners, this approach did not adequately meet planner needs, 
especially the needs of logisticians. Each deployment order required 
its own transportation feasibility analysis, which resulted in a choppy 
flow of forces into the theater. This in turn caused imbalances in the 
types of personnel needed in the theater to handle logistics 
requirements. Furthermore, a RAND study suggests that distribution 
assets, particularly for components such as the 377th Theater Support 
Command and the 3rd Corps Support Command, were either deleted from the 
deployment plan or shifted back in the deployment timeline.[Footnote 
42] As a result, logistics personnel could not effectively support the 
increasing numbers of combat troops moving into theater. 

DOD took steps to mitigate the impact of some distribution problems, 
but these did not always work. For example, according to a RAND report, 
priority was given to moving critical supplies, such as food, water, 
ammunition, and fuel. Other items, to include spare parts, were moved 
on a very limited, opportune basis. As a result, according to one after-
action report, it took nearly 2 weeks after U.S. forces moved into Iraq 
for the first shipment of spare parts to reach combat forces, and this 
delivery was inadequate to support an entire division engaged in combat 
operations. Moreover, the Army confirmed that after 45 days of enemy 
engagement, moving water still consumed over 60 percent of available 
theater transportation trucks. A Marine Corps after-action 
report[Footnote 43] listed repair parts distribution as a "near-
complete failure."

In order to move supplies to the troops, both the Army and Marines 
contracted for additional trucks. For example, the Marine Corps 
contracted for $25.6 million in services from several commercial 
trucking companies to support combat operations. It justified this 
action by identifying deficiencies in the provision of transportation 
support they expected from other components in theater. However, Army 
officials stated that its contractors did not always have sufficient 
trucks to move supplies as required because contracts did not specify a 
level of operational readiness for trucks. As a result, even if trucks 
were available, they were not always functional. In its after-action 
report, the 3rd Infantry Division stated that available transportation 
assets and contracted host nation support could not meet divisional 
requirements for carrying capacity. 

Information Systems did not Support Supply Distribution: 

According to military doctrine, financial, communication, and 
information systems used to support supply distribution must be 
accessible, integrated, connected, and contain accurate and up-to-date 
information.[Footnote 44] In other words, these systems need to provide 
a seamless flow of all types of essential data from the point of 
production to the warfighter. However during OIF, the logistics systems 
used to order, track, and account for supplies were not well 
integrated; moreover, they could not provide the essential information 
necessary to effectively manage theater distribution. 

Data Transmission Problems Hindered Supply Requisitions: 

Logistics information systems in use during OIF could not effectively 
transmit data, making it difficult to process and track requisitions 
for critical supplies. A number of factors limited communications 
between the various logistics systems, including a lack of bandwidth in 
the theater to satisfy all systems users, systems that were 
incompatible with each other, units lacking the necessary equipment or 
being delayed in connecting to the supply system, and distances being 
too great for supply activities to effectively transmit data by radio. 
For example, the supply activities in the Army's 3rd Infantry Division 
only received about 2,500 of the over 10,000 items--including armored 
vehicle track shoes, lithium batteries, and tires--they requisitioned 
between August 2002 and September 2003. Officials at the 3rd Infantry 
Division attributed this issue specifically to communications problems 
between systems. Army officials also attribute poor communications as a 
major factor leading to a $1.2 billion discrepancy between the amount 
of supplies shipped to the theater and the amount actually acknowledged 
as received, which we reported on in December 2003.[Footnote 45]

The Marine Corps similarly experienced communications problems between 
its information technology systems during OIF. Marine forces deployed 
with two different versions of the Marine Corps Asset Tracking 
Logistics & Supply System logistics information system, which were not 
compatible with each other. Marine Corps units in the 1st Marine 
Expeditionary Force were using the Asset Tracking Logistics & Supply 
System I for frontline logistics, while the 2nd Marine Expeditionary 
Force was using the Asset Tracking Logistics & Supply System II+ for 
theater support.[Footnote 46] Therefore, requisitions from Marine 
support activities at the front lines could not be transmitted directly 
to Marine logistics units in the rear. Instead, the Marines used other 
processes, such as e-mail and satellite phone to requisition supplies. 
However, this left ordering units without any information on the status 
of their requisitions. As a result, many duplicate orders were 
submitted and may have unnecessarily added more cargo to the already 
overwhelmed theater distribution system. A study by SAIC also noted 
that the lack of logistics communications was a weaknesses during 
OIF.[Footnote 47] The Army's Deputy Chief of Staff for Logistics has 
since provided satellite communications equipment to the units 
operating in theater to help alleviate these communication 
difficulties. 

Available Logistics Information Systems Did Not Provide Adequate 
Visibility: 

Another major problem encountered during OIF was a lack of adequate 
visibility over supplies in the distribution system. While the 
operation order for OIF called for the use of radio frequency 
identification, tracking was limited primarily by a failure to place 
radio frequency identification tags on all shipments sent to the 
theater and a lack of fixed scanners needed to read radio frequency 
identification tags. For example, some ports, such as one we observed 
in Bahrain, had no scanners at all. 

Another equally challenging problem was that scanners often failed 
under the harsh environmental conditions. According to one Army 
assessment, only 50 percent of the scanners inspected in Kuwait were 
operational. In addition to problems with the radio frequency 
identification technology, there was no suitable information system 
infrastructure to track and identify supply assets. SAIC reported that 
the Joint Total Asset Visibility system could not provide commanders 
with the asset visibility they needed, while military officials in 
theater told us they knew of no joint system that tracked supplies from 
the point of production to the warfighter. Rather, logistics personnel 
relied on a number of unintegrated tracking systems. As a result, 
CENTCOM and the major combat forces in the Army and Marine Corps could 
not adequately track or identify supplies moving to and within the 
theater. 

The lack of in-transit visibility over supplies significantly effected 
distribution. For example, an Army official responsible for logistics 
operations at the Theater Distribution Center noted that incomplete 
radio frequency identification tags forced the center's personnel to 
spend time opening and sorting incoming shipments. This, in turn, 
significantly increased processing time, contrary to DOD's principle of 
maximizing throughput. As a result, according to a CENTCOM issue paper, 
around 1500 Small Arms Protective Inserts plates for body armor were 
lost. Another CENTCOM report stated that 17 containers of MREs were 
left at a supply base in Iraq for over a week because no one at the 
base knew they were there. According to Marine Corps officials, they 
became frustrated with their inability to "see" supplies moving towards 
them and lost trust and confidence in the logistics system and 
processes. For example, the Marines could only verify the receipt of 15 
out of 140 AAV generators that were shipped to them. 

Changes to Unit Address Codes Disrupted Logistics Information Systems: 

The use of new OIF-specific address codes, known as Department of 
Defense Activity Address Codes, for ordering supplies limited the 
effectiveness of logistics information technology.[Footnote 48] The 
codes ensure that supplies are sent to the correct address of the 
ordering unit and that the correct unit is charged for the supplies. 
Because of poor linkages between Army logistics and financial systems, 
a problem of where to ship and who to bill surfaces unless a unit or 
activity deploys intact. For example, while some parts of the 3rd 
Infantry Division remained in the U.S. during OIF, the majority of the 
division deployed to Iraq. To ensure that ordered supplies went to the 
correct location of a deployed unit and that the unit was correctly 
charged, new codes specifically set up for OIF were issued to deploying 
entities. Meanwhile, the original codes remained with that portion of 
the unit that did not deploy. Approximately 10,000 new codes were 
created for OIF. This caused significant disruptions to logistics 
information systems as new data had to be manually updated in each 
system. Many problems occurred during this process, such as the 
issuance of inactive codes, use of codes already assigned to other 
units, and incorrect data being input into logistics systems. These 
problems were another factor contributing to the $1.2 billion 
discrepancy between supplies shipped and supplies received. 

Furthermore, there was a delay in updating the master code schedule 
that contained all the locations associated with the new codes. This 
caused significant problems for the Theater Distribution Center. 
According to an April 10, 2003 Theater Distribution Center log entry, 
"Upwards of 50% of pallets shipped to Doha and 20-30% of pallets 
shipped to Arifjan are being returned/rejected with the reason being, 
'it doesn't belong here.' The master [codes] are not being updated when 
units move in or out and the [theater distribution center] is double 
and triple handling cargo." Given that the center was already 
experiencing problems with personnel and equipment shortages; 
additional handling of the same supplies increased their difficulties. 

Logistics Personnel Were Not Trained on Some of the Logistics 
Information Systems in Use: 

A lack of adequate training for logistics personnel also negatively 
impacted the performance of logistics information systems. For example, 
according to a 101st Airborne after-action review, loading codes and 
interfacing with data caused problems that training could have 
resolved. Lack of training also contributed to problems with asset 
visibility. According to a logistics study, units were generally not 
trained in the use of radio frequency identification devices. Marine 
Corps officials likewise stated that their personnel were untrained in 
the use of tracking equipment. 

DOD Actions to Improve Supply Availability for Current and Future 
Operations: 

As a result of logistics issues that arose during OIF, DOD, the 
services, and the defense agencies have undertaken a number of actions 
to improve the availability of equipment and supplies during ongoing 
and future operations. Some are short-term actions aimed at improving 
immediate supply availability. For example, as a result of the battery 
shortage, the Joint Staff Logistics Directorate established in July 
2003 a revolving "critical few list" of approximately 25 items that the 
services and various commands report as most critically needed 
worldwide. The Joint Staff Logistics Directorate, in conjunction with 
the services, determines the causes of the shortages and makes 
recommendations to the Office of the Secretary of Defense and the 
services for corrective action and execution. Other actions are long- 
term, systemic changes that are designed to improve the overall 
effectiveness of the supply system. While we did not evaluate the 
changes' potential for success, we observed that the majority of them 
focus on the distribution aspects of logistics problems, not the full 
range of supply deficiencies we identified. However, other GAO 
engagements are currently underway to assess some of these initiatives. 
(Specific short-term and long-term actions related to each item are 
noted in the appendixes.)

* Inaccurate and inadequately funded war reserve requirements. The Army 
has not updated or run its war reserve model in order to systemically 
ensure the accuracy of its war reserve requirements. Due to its risk 
management decisions, it has also not funded its war reserve 
requirements. However, the Army has made manual changes to its war 
reserve inventory levels, based on the usage of certain items during 
OIF. 

* Inaccurate supply forecasts. DOD and the services have not undertaken 
systemic actions specifically aimed at improving the accuracy of supply 
forecast. However, DLA has undertaken action to improve its customer 
support through its Customer Relationship Management program, which 
could potentially improve its ability to forecast customer demands. 

* Insufficient and delayed funding. The Army has not undertaken long-
term actions to expedite its funding process during contingencies to be 
more responsive to customer needs. However, it has undertaken short-
term actions to obtain additional funding for specific supply items. 
For example, AMC directed funding towards armored vehicle track shoes. 

* Delayed acquisition. DOD has not undertaken long-term actions to 
address acquisition issues that contributed to shortages of certain 
case study items. However, DLA has undertaken other actions to improve 
its ability to leverage industrial-base capabilities. DLA seeks to 
improve industrial-base support through its collaborative planning 
initiatives with industry. For example, its Strategic Materiel Sourcing 
program establishes long-term contracts for approximately 500,000 (of a 
total 4.6 million) items the agency considers critical to its 
customers' needs. In addition, its Strategic Supplier Alliances program 
establishes formal relationships with the agency's top 32 sole source 
suppliers. 

* Ineffective distribution. DOD has undertaken many initiatives to 
improve its distribution system, including the Secretary of Defense's 
designation of the U.S. Transportation Command as the Distribution 
Process Owner. According to a Secretary of Defense memorandum,[Footnote 
49] the U.S. Transportation Command is responsible for improving the 
overall efficiency and interoperability of distribution-related 
activities. In January 2004, the command established a CENTCOM 
Deployment and Distribution Operations Center, which is responsible for 
directing airport, seaport, and land transportation operations within 
the OIF theater. DOD's Pure Pallet initiative seeks to reduce 
inefficiencies in the distribution process and improve in-transit 
tracking of shipments by building containers and pallets with radio 
frequency identification tags that are designated to units within a 
specific geographic location. 

The Army and DLA have also undertaken numerous actions to improve the 
distribution system. The Army has identified four areas of focus for 
the next 2 years: (1) "Connect Army Logisticians" by using technology 
to provide logisticians and warfighters with real-time visibility over 
distribution and warfighter requirements, (2) "Modernize Theater 
Distribution" by developing a distribution-based logistics system to 
support the warfighter, (3) "Integrate the Supply Chain" by providing a 
system wide view of the supply chain through the integration of 
processes, information, and responsibilities, and (4) "Improve Force 
Reception" by enhancing the Army's ability to deploy forces to theaters 
of operation by establishing an early port opening capability that will 
result in-theater expansion and increased theater sustainment. 
Furthermore, the Army has expanded its Rapid Fielding Initiative, which 
accelerates acquisition and fielding processes to ensure that troops 
deploy with high-priority items. DLA has also expanded its Forward 
Stocking Initiative by opening a fifth forward stock depot in Kuwait to 
reduce customer wait time and transportation costs. Moreover, AMC and 
DLA have formed a partnership in which they will explore the use of 
commercial systems to increase supply readiness, improve in-transit 
visibility, cut costs, and improve parts resupply to field locations. 

Conclusions: 

In times of war, the defense supply system needs to be as responsive 
and agile as the combat forces that depend upon it. In the Quadrennial 
Defense Review for 2001, DOD stated its intention to transform its 
logistics capabilities to improve the deployment process and implement 
new logistics support tools that accelerate logistics integration 
between the services and reduce logistics demand and cost. OIF tested 
this system as well as industry's capability to meet rapidly increasing 
demands, and, in many instances, the system failed to respond quickly 
enough to meet the needs of modern warfare. While units in Iraq 
achieved success on the battlefield, the supply chain did not always 
adequately support the troops and combat operations. A number of 
problems prevented DOD from providing supply support to its combat 
forces at many points in the process, which reduced operational 
capabilities and forced combat commanders to accept additional risk in 
completing their missions. An inability to adequately predict the needs 
of warfighters at the onset of the war, coupled with a slow process for 
obtaining additional resources once those needs were identified, 
resulted in critical wartime shortages. In addition, even when 
sufficient supply inventories were available within the system, they 
were not always delivered to the combat forces when they needed them. 
All of these problems were influenced to some extent by a lack of 
accurate and timely information needed to support processes and 
decisions. 

Unless DOD's logistics process improves the availability of critical 
supplies during wartime, combat forces engaged in future operations 
will likely be exposed to risks similar to those experienced in Iraq. 
These risks will continue to exist unless DOD is able to improve the 
availability of war reserve supplies at the start of operations and 
overcomes problems forecasting accurate wartime demands. Moreover, 
delays in the Army's funding processes will continue to place U.S. 
troops at risk by not enabling AMC to swiftly meet surges in wartime 
demands. In addition, future combat operations may be adversely 
affected unless DOD is able to anticipate acquisition delays that could 
affect the availability of critical supplies and provide transparency 
into how it expects to mitigate production risks. Finally, merely 
increasing the availability of supplies in the inventory will not help 
combat forces in the field. Troops will continue to face reduced 
operational capabilities and unnecessary risks unless DOD's supply 
chain can distribute the right supplies to the right places when 
warfighters need them. 

While DOD took immediate steps to overcome some shortages, and is 
beginning to develop solutions to some of the problems identified 
during OIF, most systemic solutions have tended to center on resolving 
distribution problems. If supply logistics transformation is to be 
successful, DOD's supply chain reform will need to include solutions 
for the full gamut of identified deficiencies contributing to supply 
shortages during OIF. An integrated approach to addressing all of these 
deficiencies will increase DOD's potential to achieve responsive, 
consistent, and reliable support to warfighters, a goal envisioned in 
the National Military Strategy and its logistics concepts and necessary 
to support the continued dominance of the U.S. military. 

Recommendations for Executive Action: 

To improve the effectiveness of DOD's supply system in supporting 
deployed forces for contingencies, we recommend that the Secretary of 
Defense direct the Secretary of the Army to take the following three 
actions and specify when they will be completed: 

* Improve the accuracy of Army war reserve requirements and 
transparency about their adequacy by: 

* updating the war reserve models with OIF consumption data that 
validate the type and number of items needed,

* modeling war reserve requirements at least annually to update the war 
reserve estimates based on changing operational and equipment 
requirements, and: 

* disclosing to Congress the impact on military operations of its risk 
management decision about the percentage of war reserves being funded. 

* Improve the accuracy of its wartime supply requirements forecasting 
process by: 

* developing models that can compute operational supply requirements 
for deploying units more promptly as part of prewar planning and: 

* providing item managers with operational information in a timely 
manner so they can adjust modeled wartime requirements as necessary. 

* Reduce the time delay in granting increased obligation authority to 
the Army Materiel Command and its subordinate commands to support their 
forecasted wartime requirements by establishing an expeditious supply 
requirements validation process that provides accurate information to 
support timely and sufficient funding. 

We also recommend that the Secretary of Defense direct the Secretary of 
the Navy to improve the accuracy of the Marine Corps' wartime supply 
requirements forecasting process by completing the reconciliation of 
the Marine Corps' forecasted requirements with actual OIF consumption 
data to validate the number as well as types of items needed and making 
necessary adjustments to their requirements. The department should also 
specify when these actions will be completed. 

We recommend that the Secretary of Defense direct the Secretary of the 
Army and Director of the Defense Logistics Agency to take the following 
two actions: 

* minimize future acquisition delays by assessing the industrial-base 
capacity to meet updated forecasted demands for critical items within 
the time frames required by operational plans as well as specify when 
this assessment will be completed and: 

* provide visibility to Congress and other decision makers about how 
the department plans to acquire critical items to meet demands that 
emerge during contingencies. 

We also recommend the Secretary of Defense take the following three 
actions and specify when they will be completed: 

* revise current joint logistics doctrine to clearly state, consistent 
with policy, who has responsibility and authority for synchronizing the 
distribution of supplies from the U.S. to deployed units during 
operations,

* develop and exercise, through a mix of computer simulations and field 
training, deployable supply receiving and distribution capabilities 
including trained personnel and related equipment for implementing 
improved supply management practices, such as radio frequency 
identification tags that provide in-transit visibility of supplies, to 
ensure they are sufficient and capable of meeting the requirements in 
operational plans, and: 

* establish common supply information systems that ensure the DOD and 
the services can requisition supplies promptly and match incoming 
supplies with unit requisitions to facilitate expeditious and accurate 
distribution. 

Matter for Congressional Consideration: 

To improve visibility over the adequacy of the Army's war reserves, 
Congress may wish to consider requiring the Secretary of Defense to 
provide it information that discloses the risks associated with not 
fully funding the Army war reserve. This report should include not just 
the level of funding for the war reserve, which is currently reported, 
but timely and accurate information on the sufficiency of the war 
reserve inventory and its impact on the Army's ability to conduct 
operations. 

Agency Comments and Our Evaluation: 

In written comments on a draft of this report, DOD agreed with the 
intent of the recommendations and cited actions it has or is taking to 
eliminate supply chain deficiencies. Some of the actions could resolve 
the problems we identified when completed. Because DOD did not specify 
dates for completing all of its actions, we modified our 
recommendations to require specific time lines for their completion. 
DOD is taking other actions that are not sufficient to fulfill our 
recommendations and, in several cases the department's comments did not 
specifically address how it plans to improve current practices. In 
addition to our evaluation below, we address each of DOD's comments in 
appendix XI where its complete response is reprinted. 

The department cited several actions it is taking to improve the 
accuracy of war reserve requirements, support prewar planning through 
supply forecasting, minimize future acquisition delays, and improve 
supply distribution. However, it did not clearly identify time lines 
for fully implementing most of these actions. For example, initiatives 
to improve modeling and data for determining war reserves had no dates 
for implementation. In some cases, the department provided tentative 
schedules, such as with the fielding of the Army's Logistics 
Modernization Program to improve supply forecasting, which it expects 
to be in full use in fiscal year 2007. In another instance, it provided 
a May 2006 deadline for the developing an information technology plan 
to improve distribution, but did not indicate when the plan's 
recommendations will be implemented. Therefore, we have modified our 
recommendations to require that DOD specify when these actions will be 
completed. 

In two instances DOD cited actions we do not consider sufficient to 
fulfill our recommendations. The department stated that its annual 
Industrial Capabilities Report to Congress, as well as the budget 
process and other forums, provide adequate information on acquisition 
of critical items. While we agree that the report provided visibility 
about some items, such as body armor, it did not identify concerns 
about acquiring up-armored HMMWVs and kits. Therefore, we do not 
believe current reporting forums provide Congress with the consistent 
visibility and information needed to make informed decisions on actions 
that could speed the acquisition of critical items. In another 
instance, DOD cites the establishment of the Deployment and 
Distribution Center in CENTCOM as its means of testing improvements to 
distribution capabilities. While the center may improve deployable 
logistics capability, the department did not commit to actions, as we 
recommended, that would ensure through simulation and field training 
that there are sufficient trained personnel and equipment to meet the 
requirements of the operational plans--a problem in theater before and 
during the arrival of combat forces. Therefore, we continue to believe 
these recommendations have merit. 

DOD did not commit to any specific action to improve transparency to 
Congress of the risks associated with inadequately funding Army war 
reserves. The department said this risk is already reported to Congress 
in the budget process and a number of other ways. As stated in this 
report, the methods cited by DOD, such as the budget documentation, do 
not ensure consistent transparency by clearly stating the operational 
risks of underfunding the Army war reserves. Therefore we believe our 
recommendation has merit and have added a matter for congressional 
consideration that suggests Congress may wish to require DOD to 
disclose the risks associated with not fully funding the Army war 
reserve. 

While DOD agreed with the intent of three recommendations, it did not 
commit to any specific actions to address them. The recommendations 
would (1) ensure item managers are provided operational information in 
a timely manner, (2) reduce the time delay in granting increased 
obligation authority to AMC and its subordinate commands, and (3) 
revise joint doctrine to clarify responsibility and authority for 
synchronizing distribution. We believe that these recommendations have 
merit and have cited the reasons in our comments in Appendix XI. 

We are sending copies of this report to the appropriate congressional 
committees; the Secretary of Defense; the Secretaries of the Army and 
the Navy; the Commandant of the Marine Corps; the Commander, U.S. 
Central Command; the Commander, U.S. Transportation Command; the 
Director of the Defense Logistics Agency; and other interested parties. 

If you or your staff members have any questions regarding this report, 
please contact me at (202) 512-8365. Key contributors to this report 
are listed in appendix XII. 

Signed by: 

William M. Solis, Director: 
Defense Capabilities and Management: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To address our objectives, we employed a case study approach, selecting 
nine supply items with reported shortages as a way to assess the 
availability of supplies and spare parts during Operation Iraqi Freedom 
(OIF). We judgmentally selected the nine items because we believed they 
presented possible shortages with operational impacts based on our 
prior work on OIF logistics and other sources such as military "after- 
action" reports on OIF operations, military and contractor "lessons 
learned" studies, briefings, congressional testimonies, and interviews 
with Department of Defense (DOD) and military service officials 
covering the time period between October 2002 and September 2004. We 
selected the items to encompass a variety of supply sources and users 
within DOD, the Army, and the Marine Corps. The items we selected and 
the supply sources for each item are shown in table 6. 

Table 6: Item and Supply Manager: 

Item: Assault Amphibian Vehicle (AAV) generators; 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Columbus) and Marine Corps Logistics Command. 

Item: Armored vehicle track shoes; 
Supply manager: Army Materiel Command (Tank-automotive and Armaments 
Command). 

Item: Interceptor body armor; 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Philadelphia). 

Item: Chemical-biological suits; 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Philadelphia). 

Item: Lithium batteries; 
Supply manager: Army Materiel Command (Communications-Electronics 
Command). 

Item: Helicopter rotor blades; 
Supply manager: Naval Inventory Control Point Philadelphia. 

Item: Meals Ready-to-Eat (MRE); 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Philadelphia). 

Item: Tires for 5-ton trucks and High-Mobility Multi-Purpose Wheeled 
Vehicles (HMMWV); 
Supply manager: Army Materiel Command (Tank- automotive and Armaments 
Command). 

Item: Up-armored HMMWVs and add-on armor kits; 
Supply manager: Program Executive Office Combat Support and Combat 
Service Support, Warren, Mich. 

Source: GAO. 

Note: The Defense Logistics Agency (DLA) became the manager of lithium 
batteries in October 2004. 

[End of table]

To verify the existence of reported shortages and to determine their 
extent, we interviewed DOD logistics officials and industrial-base 
suppliers. We also collected and analyzed supply data, such as 
requirements, customer demands, inventory levels, p